Google mix-up caused $1 billion run on United
The US Securities and Exchange Commission has opened a “preliminary inquiry” into how an outdated bankruptcy story sparked a $1 billion run on an airline’s stock value.
The article about how United Airlines filed for bankruptcy in 2002 was revived when it showed up on a newspaper site’s “most viewed” section on Monday.
From there it was picked up by Google News and later seen by alarmed stockholders. The stock plunged from around $12 to just $3 a share before trading was halted.
The Chicago-based company’s shares did not fully recover once trading resumed on Monday, and were still down at just over $11 dollars at close of trading yesterday
With the possiblity of legal action in the air, those involved have been hotly disputing who was to blame.
The errors provide a salutary lesson for investors of the power and perils of computer automation and throw a spotlight on Google’s News search technology which, using “Googlebot” algorithms, scours web pages in search of news articles.
To many, the episode has been a reminder that computer programs, no matter how sophisticated, can be a poor substitute for human beings.
The comedy of errors began with just one reader who went to the South Florida Sun Sentinel’s website and viewed a 2002 article on United Airlines’ bankruptcy.
That single visit in the early hours of Sunday morning, a period of low traffic, apparently bumped it into a “Popular Stories” in the business section.
At 1:37am, an electronic Google program swept through the paper’s website for new stories and spotted the link.
Google says its program scanned the piece and, seeing there was no 2002 dateline, indexed the article for inclusion on its news pages.
Three minutes and two seconds later, Google News readers started viewing the story on the Sun Sentinel’s Web site.