Stop the press: what does fake news mean for businesses?
Donald Trump is obsessed with it, it’s labelled a ‘sin’ by Pope Francis and was named the 2017 Word of the Year by Collins Dictionary, but don’t be fooled – fake news is nothing new.
In fact, it’s been affecting businesses from as early as 1803, when Britain was preparing to end the Treaty of Amiens and declare war on France. That is, until a curious letter was delivered to the Lord Mayor of London. Supposedly written by Lord Hawkesbury, the letter claimed that the dispute between Britain and France had been settled amicably. Astonished, the mayor rushed to the Stock Exchange, informing everyone that the war was over. Stocks shot up by 5% in an instant.
It didn’t take long, however, before the letter was found to be a forgery. Later that day, the Treasury issued a statement to the press, concluding that ‘it was a fabrication, and totally destitute of truth’. But it was too late. Brokers, businesses, the Lord Mayor of London, indeed the entire stock market had all being caught out, hook line and sinker.
Over two centuries later, fake news continues to dupe unsuspecting victims all over the world. According to Rita Marcella, Professor of Information Management at Robert Gordon University, the sheer scale of the problem is worse now than ever.
‘Fake news is not a new phenomenon,’ Marcella says, ‘but it’s a much more visible issue in the world today. Nowadays we can’t even get out of bed in the morning without being exposed to information; we have news feeds coming at us left, right and centre. Anyone can fall victim, and businesses are no exception.’
Assessing the real damage
Last year, several members of the online message board 4Chan spread a rumour that one of the co-creators of the cryptocurrency platform Ethereum had died in a car crash. The story spread like wildfire, casting doubt over the future of crypto – and causing a $4 billion plunge in Ethereum’s market value. It was only when the co-creator himself, Vitalik Buterin, posted a selfie on his Twitter account that the rumour came to a halt.
And it’s not just big organisations that hit the headlines. In May 2017, Karri Twist – a small Indian restaurant in London – was targeted by a fake news article that claimed it sold human meat. The article went viral on social media, taking weeks to quash, but by then the damage was done.
On Twitter, fake news spreads farther, faster, deeper, and more broadly than the truth in all categories of information, according to new research from the Massachusetts Institute of Technology (external link). ‘Business owners always need to be on the lookout,’ Marcella says. ‘But they also need a strategy addressing how they would immediately respond to the attack, gain the upper hand and put it to rest swiftly.’
Best form of defence
So, what’s the best tactic? Refute the story as soon as possible. Tweets, emails, posts, press releases – anything goes, so long as it’s done quickly. Equally important is understanding the distinction between disinformation and misinformation.
Whereas fake news is a form of disinformation (the intentional creation and dissemination of false information), misinformation (the unintentional creation and/or dissemination of false information) can be anything from an exaggerated claim about a product’s quality to a typo.
Misinformation can be just as, if not more, costly than disinformation. Businesses therefore need to take steps to avoid inadvertently misleading their customers. Sometimes it’s self-explanatory: never omitting key information or always listing prices. At other times it’s more complicated; for example, understanding where to draw the line in promoting the benefits of your product or service.
No news is good news
In recent years, fake news has become something of a business model. Services offer automated internet robots, articles and even entire websites designed to denigrate or promote specific services, products and businesses.
For the victim, the results are catastrophic, damaging reputation and share prices alike. ‘Fake news can be used by rival businesses as a form corporate espionage,’ says Marcella. ‘It can cause serious damage, even leading to the demise of a competitor.’
But is it worth the risk? In 2012, one of South Korea’s most popular bakery brands, Paris Baguette, came under fire after a customer posted a photo of a dead rat in one of their loaves of bread. Except it was a hoax. A reporter eventually found out that the story had been cooked up by a rival bakery. Over the next two years, both the offending bakery’s reputation and that of its owning franchise were summarily dismantled, whereas the victim’s reputation recovered in less than half the time.
Fake news is a powerful weapon, but it can easily backfire, inflicting just as much, if not more damage on the attacker. Researchers at the UBC Sauder School of Business found that, while fake news does indeed damage the victim’s business in the short term (external link), it causes greater and more lasting damage to the attacker’s business in the long term. Its conclusion: If you ever think about using it to smear a rival, think again. Or suffer the consequences.
Read between the lines
It’s been over 200 years since the Right Honourable Lord Hawkesbury hoodwinked the entire stock market with nothing but a letter, yet his legacy continues. Everyone, and everything, is a target. All businesses can do is hope for the best, and prepare for the worst. The experts’ advice? Form a solid defence strategy, stamp out fake stories as quickly as possible, and whatever you do, don’t mislead the public, whether inadvertently or not. Fake news is bad for business. And that’s the truth.