Are we giving up too much Control to Technology? - The Intrepid

Thursday, September 11, 2008

Are we giving up too much Control to Technology?

On Monday morning, United Airlines stock dropped 76% after a six-year-old article by reporting the company’s bankruptcy accidentally made it to the front page of Bloomberg Financial News. The article was accidentally recovered by Google’s News service when a third party Bloomberg analyst searched the terms “bankruptcy 2008,” found the article, and posted it to the Bloomberg Professional Network. The article, which originally appeared in the Chicago Tribune in 2002, came from the website of the South Florida Sun-Sentinel.

Google’s Search Bot originally picked up the article and assigned the date it found it, September 6, 2008, because the article was undated on the Sun-Sentinel’s site. In immediate aftermath of the story, automated trading systems issued a “stop loss” order and United Airlines stock went into freefall. Trading on the stock halted after 30 minutes, and about an hour later Bloomberg issued a retraction, and apologized for posting the story.

Today, Tribune Co., the parent company of the Sun-Sentinel and the Chicago Tribune blamed Google for the mix up. Tribune said that Monday’s confusion started because Google News Service could not tell the difference between old news and popular news on the Sun-Sentinel site. Tribune claims that it identified the problem with the undated material on the Sun-Sentinel site months ago and asked Google to stop crawling the site. Google denies that this request was made.

While it is unlikely that Tribune, Google, or Bloomberg will have to face legal action, there are two parties at fault for this mess: the third-party Bloomberg analyst and the various automated trading systems. The analyst is in part to blame for this mess because the reporter failed to check source of the material or for any other collaborating articles.

"It would have been nice if the reporter had been more grounded in what's going on out there in the world,” said Richard Lehman the head of a third-party Bloomberg contributor to Bloomberg.

The mechanized trading systems are also to blame, as this knee jerk reaction occurred within the first few minutes with little to no human oversight. While trading has evolved to such a degree that constant supervision is almost impossible, it is almost impossible to believe that millions of dollars could be lost to such a simple oversight.

Although incredibly clichéd, this example is an important reminder that technological systems are never flawless and will always require human oversight.


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