By allowing people to make constant, instantaneous updates, Twitter has at once increased the amount of information to be analyzed and decreased the amount of time in which to analyze it, leaving less room for people to judge the accuracy of news reports -- and more room for rumors.
It’s one thing when false reports of, say, a celebrity’s death spread all over the Internet via Twitter: while momentarily distressing for fans (and the individual in question) these rumors aren’t usually the kind of thing that can necessarily move stock markets or drive up prices. On Monday, however, a false rumor to the effect that Syrian dictator Bashar al-Assad had been killed or injured caused crude oil futures on the New York Mercantile Exchange to rise from $90.82 to $91.99 -- probably out of fear that Assad’s demise would lead to wider instability in the Middle East.
The rumor was plausible for a couple reasons. It came from a Twitter account supposedly belonging to Russian interior minister Vladimir Kolokoltsev; as one of Syria’s closest allies, the Russians might well be among the first to learn of such an event. Furthermore, a few weeks ago the Syrian security chief was killed by a huge bomb, probably with the help of a high-ranking official sympathetic to the Syrian rebels. And Iran, a close Syrian ally, might indeed be provoked to upset the regional apple cart if Assad goes down in flames.
But it wasn’t true: in all the frantic tweeting and re-tweeting and emailing and text messaging, no one apparently thought to verify that it really was Kolokoltsev’s Twitter account.
Of course, this isn’t really Twitter’s fault. The real problem is when part of the business world -- in this case, commodities trading -- becomes so dependent on cutting-edge knowledge that participants feel they must act on unsubstantiated scraps of information, without waiting for verification. It makes sense from their point of view: by the time a rumor is verified, it will have become general knowledge, meaning the window for an advantageous transaction will have closed.
Rumors have always been part of commodities trading and the business world in general. But new communications technology has vastly expanded the scope of the rumor mill, so that where before a few dozen commodity traders might have acted on a rumor to their profit or detriment, now it could be hundreds or thousands. In this context, it’s only a matter of time before an even bigger market dislocation -- in commodities, on the stock exchange, or elsewhere -- results from someone planting a really well-executed rumor. If unchecked, online rumor-mongering could eventually undermine confidence in marketplaces that appear susceptible to misinformation (to say nothing of the trading glitches that keep popping up recently).