There is an epidemic of online fake news — and it is hitting us hard, not only in our levels of trust but also in our pockets.
An economic study by Tel Aviv, Israel-based cybersecurity firm CHEQ and the University of Baltimore have revealed that fake news is costing the global economy $78 billion each year.
It recently commissioned a report detailing the scale of the global rise of online fake news and how much this impacts us financially. It used the latest economic analysis, proprietary CHEQ data, and expert interviews for its report.
The report analyzes the direct economic cost inflicted by fake news, alongside the growing price paid by businesses and governments to counter misinformation.
Fake news is defined as: “The deliberate creation and sharing of false or manipulated information that is intended to deceive and mislead audiences, either to cause harm or for political, personal or financial gain.”
The study reveals that fake news has contributed a loss in stock market value, amounting to $39 billion a year.
The economic losses underline the rise of the spread of misinformation and fake news as a top global risk, causing detriment to major sectors including healthcare, politics, ecommerce, media, and finance.
Other varied costs include economic losses from health misinformation ($9 billion a year in losses), financial misinformation ($17 billion), reputational management ($9 billion), platform safety efforts ($3 billion a year), and loss of brand dollars advertising next to fake news ($235 million).
According to the study, at least $400 million annually is set to be spent on fake news in political races. A Princeton-led study of fake news consumption during the 2016 US campaign found that false articles made up 2.6% of all hard-news articles late in the 2016 campaign.
Therefore, based on current and estimated volumes of fake news, the study reveals that $200 million will be spent on boosting, advertising, and deploying fake news in the upcoming US presidential election in 2020.
In other parts of the world, it is a similar story. The spend on online fake news in India’s seven-phase general election in 2019 amounted to $140 million. On the other side of the world, expenditure on fake news amounted to $34 million in Brazil’s race in 2018.
Elections in Kenya saw $20 million spent on politically motivated fake news, and South Africa witnessed a further $2.7 million spent. In the UK, the electorate was likely exposed to a spend on fake news worth at least $1 million in 2017.
This highlights the economic damage of fake news and misinformation across sectors. It could be significantly higher when indirect economic costs are included.
Such indirect economic costs include loss of trust in major institutions, chilling of innovation, reputational damage, loss of brand equity, and strains on costly institutions such as the army and police.
This could bring the losses from fake news closer to $100 billion annually.
The World Economic Forum ranks the spread of misinformation and fake news as among the world’s top global risks, and fake news outlets and operations are seeing unprecedented traffic and engagement.
In our global economy, trust is important. The spread of fake news impacts on our ability to make sensible, informed decisions. But spreading fake news is simple. The ad market is ideal to rapidly spread any information across a wide platform, and the lack of fact-checking platforms means that this news will continue to spread unhindered.
Efforts must be made to ensure greater transparency and rebuild the trust that we used to have in our news sites. With the propagation, sharing, and proliferation across these sites, spreading the news unhindered, we still have a long way to go.