Prof. Cavazos: 'Fake News' Has a Real Cost - and It's in the Billions
November 22, 2019
Contact: Office of Government and Public Affairs
In the third in a series of reports, "The Economic Cost of Bad Actors on the Internet," Roberto Cavazos, Executive in Residence in the University of Baltimore's Merrick School of Business and a veteran economic analyst with extensive experience in financial, data and health care fraud, joins with CHEQ, a Tel Aviv-based cybersecurity company specializing in risk management for online advertising, to estimate the real cost of fraudulent news. The answer: nearly $80 billion annually.
"Fake news," as it is commonly known, refers to the proliferation of online reporting that is poorly sourced or completely made up. This first-ever in-depth economic analysis of the economic impact of the problem says the price tag to the global economy is $78 billion each year, with economic damage being inflicted on major sectors including politics, finance, advertising, online retail, and media.
In its own extensive report on fake news, the British House of Commons Digital, Culture, Media and Sport Committee Disinformation formally defined the problem of fake news as "the deliberate creation and sharing of false and/or manipulated information that is intended to deceive and mislead audiences, either for the purposes of causing harm, or for political, personal or financial gain."
Fake news, according to Cavazos and CHEQ, is "affecting everything from stock markets to media, reputation management, election campaigns, financial information and healthcare."
The "cardinal principle of trust that underpins free market economies" is under real threat, the report asserts.
Governments and the private sector are fighting back against this tide, the study points out. It cites efforts by the U.S. Department of Defense Advanced Research Projects Agency, which put $68 million toward a technological solution for spotting manipulated videos to protect national security. Britain has spent 18 million pounds on a "fake news fund" for Eastern Europe, while the European Commission has spent $5.5 million on a system to support European Union member states in recognizing disinformation campaigns. China, Canada, Brazil and other countries also are noted for their endeavors to combat illegitimate news reporting.
Earlier this year, Prof. Cavazos and CHEQ collaborated on studies about fake influencer culture and fraud in digital advertising. In each of these cases, including fake news, technology has raced ahead of the ability of the law, business and consumers to figure out what is real and what is not. The price, naturally, is paid by all of us: Trust is eroded, investments are shredded, and the economy takes a hit.
Download Cavazos's report, "The Economic Cost of Bad Actors on the Internet: Fake News in 2019" from CHEQ.
The University of Baltimore is a member of the University System of Maryland and comprises the College of Public Affairs, the Merrick School of Business, the UB School of Law and the Yale Gordon College of Arts and Sciences.