When Citizen Journalism Attacks: CNN Gaffe Causes Stock Drop

Josh Catone
Josh Catone

Sarah Perez reports that a bogus story on CNN’s citizen journalism site iReport this morning, which claimed that Apple CEO Steve Jobs had suffered a massive heart attack, “spread like wildfire” across the web. The story, which has since been removed, was later fact checked by Silicon Alley Insider — a blog that actually employs journalistic standards — and Apple quickly squashed the report as a rumor. Jobs has indeed not had a heart attack.

But the damage was already done. Apple’s stock price fell about 10% as the bogus report spread across the Internet during the morning trading session (it has since recovered). Perez says that citizen journalism has failed us, noting that episodes like this reflect poorly on CNN and on citizen reporters who take their responsibility seriously.

But was it citizen journalism that failed us? Or was it the Internet in general? The web is the latest in a string of new technologies over the past hundred years that have continued to shorten the news cycle from days (newspaper) to hours (radio/television) to minutes (blogs/cell phones) to seconds (Twitter)? There is danger in the ever shorter news cycle.

This is not the first that time a stock has taken a hit because of a rumor or mistake that became widely reported as fact across the Internet.

A month ago, United Airlines saw their stock plummet 75% after a bug in Google news surfaced a six year old story about bankruptcy. Whether caused by a bug in Google’s technology or a shoddy content management system at the paper that failed to date, or put the wrong date on the old article is still up in the air. In the age of instant information, the point is that “news” on the Internet can have immediate or disastrous results whatever the source.

In May of 2007, a rumor reported on the widely respected blog Engadget — which is owned by traditional media company AOL — about delays for Apple’s iPhone wiped $4 billion off Apple’s market cap in just a few minutes. The stock recovered after Engadget posted a retraction, but again — a shoddy source led to disaster in just minutes because of how fast information spreads.

In February 2006, a Merrill Lynch report that the Playstation 3 would be delayed and cost $900 made Sony’s stock drop 3.6% in a day. Perhaps the analyst report would have affected the stock’s trading regardless, but the rumor spread like wildfire over the Internet.

What all these anecdotes tell us is that on the web, rumor has become a very powerful and dangerous thing. Much more powerful than it was ten or twenty years ago, when rumors couldn’t spread nearly so quickly and could often be squashed by pesky facts before doing much damage.

The specific case of the CNN iReport this morning highlights the need for trained reporters to vet rumors and report actual facts. Another, perhaps overlooked, lesson that we can take from this is that we all need to slow down and breathe. Take some time to make sure we get the facts straight rather than rushing to be the first to publish a story.