Director of Communications at CHEQ. Formerly at LawGeex, SimilarWeb and EY.
Diverse sections of the economy are facing very real costs from bad actors propagating fake news online. In a study, undertaken by cybersecurity company CHEQ (where I work) and the Merrick School of Business at the University of Baltimore, the full economic losses from fake news were revealed. Here are 10 sectors facing urgent and damaging losses from the epidemic of fake news.
Fake news stock market scares have inflicted severe damage to global stock markets. Most recently in 2019, news outlets were duped by a letter purporting to come from Larry Fink, CEO of investment firm BlackRock leading to fluctuations worth hundreds of millions of dollars. In another case, stocks tanked $341 billion in a single incident. Based on an analysis of all past cases involving fake news inflicting damage on global stock markets, there was a potential loss of up to 0.05% of stock market value is at risk due to fake news.
This amounts to a $39 billion annual loss as a direct result of fake news.
The cost of health epidemics, particularly unvaccinated individuals have been furthered by fake news reports spreading as quickly as diseases. Science journal, Nature, analyzing 14 million tweets found fake accounts responsible for “a disproportionate role in spreading articles from low-credibility sources”. Simon Stevens, the head of the NHS in the UK, has said fake news by anti-vaxxers on social media “has fueled a tripling in measles cases in the country’’.
The economic costs are massive: preventable diseases among adults, like measles, costs the U.S alone nearly $9 billion a year.
In the field of election spending, at least $200 million will be spent on fake news in the US alone in 2020. A Princeton-led study of fake news consumption during the 2016 US campaign, found that false articles made up 2.6 percent of all hard-news articles late in the 2016 campaign. Let's assume that levels of fake news have reduced slightly to around 2% of all political news, and based on projected spending of $10 billion in the 2020 US Presidential election:
We can conservatively assume that $200 million will be spent promoting and spreading fake news in the next election cycle.
The world’s biggest brands have suffered as their online advertising is being displayed alongside inflammatory and fake content they do not endorse. By appearing in places they do not want their brands anywhere near they are essentially wasting ad dollars. The Global Disinformation Index has found that at least $235 million in revenue is generated annually from ads running on extremist and disinformation websites, fueled in part by the world’s most well-known companies. Elsewhere, big brands have advertised next to fake cancer cure news. While it is simply a waste of money, it is also severely damaging to appear next to hate or misinformation.
Hundreds of companies have been forced to spend resources denying false information against their companies. BuzzFeed found that the most viewed fake stories included widely disseminated stories on top global companies. These included stories targeting Nike (falsely claiming Michael Jordan quit its board) and Samsung (falsely claiming the electronics giant was being sued). These two fake articles alone racked up 2.2 million Facebook engagements. This requires costs of engagement, reputation management and executive time.
To give a size of the growing costs in this arena, social media management/analytics market, of which reputation management is a sub-segment, its estimated to grow to $9.54 billion by 2022.
The global government costs of tackling fake news include multiple inquiries (the Mueller report alone cost US taxpayers $32 million according to the Justice Department) to new legislation, media literacy programs, and enforcement against bad actors.
Police resources are strained dealing with the epidemic of fake news. In France, the gilets jaunes anti-government protests caused a surge in “fake news” with false information viewed an estimated 105 million times during five months of protest. Google closed 210 channels on YouTube it said were part of a “coordinated” attempt to post material about protests in Hong Kong”. Nigerian police have claimed that false images and news, exacerbated already-tense conflicts. The South African Police Acting national police commissioner, Lt Gen Khomotso Phahlane underlines argues fake news not “only sows panic”, but is “wasting police’s time and resources.”
Facebook CEO, Mark Zuckerberg has said the amount of our budget that goes toward our safety systems is greater than Twitter’s whole revenue this year’’ — Twitter reported $3 billion revenue in 2018.
He adds that Facebook employs 30,000 professionals globally and pores over more than two million pieces of content every day. Other investments: Facebook bought Bloomsbury AI and Twitter acquired Fabula AI, while overall companies tackling the problem receive mounting funding in a bid to tackle the crisis.
Trip Advisor won $9,300 in costs and damages against one individual writing malicious fake reviews. Amazon has hit back against fake news with a series of lawsuits against websites that offer to post fake verified reviews. The Mueller probe indicted thirteen Russians, twelve of whom worked for the Internet Research Agency as part of its investigation into fake news. This trend of enforcement is only likely to increase, bringing spiraling costs for governments and enforcement officials.
Economic losses are not only direct but also indirect. Fake news is diminishing public trust. In particular, trust in the news media has dropped from 55% in 2015 to 32% in 2019. Trust in peer reviews has dropped as fake reviews become more prominent (online reviews were found in the UK alone to influence $26 billion a year of consumer spending each year).
The economic costs of fake news — straining sectors from health, to finance and advertising — reflects the broad sweep of the menace. What is clear is that the spread of fake news is all-encompassing, global and a very large and unpredictable new business expense.