Some people worry that artificial intelligence will become so smart it will be dangerous, but turns out dumb artificial intelligence poses a threat too. I'm Jonathan Strickland, and this is tech Stuff Daily. On October, a series of odd stories published on the dal Jones newswires. The stories were all fake and clearly not intended for publication. The official word from dal Jones was that a technical error was the culprit and had erroneously published these fake stories. In other words,
this is a verified case of fake news. What exactly was reported and what happened. The stories headline was Google Apple joined to create tech giant. Such a headline would be truly enormous news in the text sphere. The story is a short one, so I'll share it in its entirety. Here's how it read. In a surprise move to everyone who is alive, Google said it's going to buy Apple for nine billion dollars. Google chief executive Larry Page had secret talks with the now deceased Steve Jobs to firm
up the deal. The deal was announced when Jobs as will was read in Cupertino, California. The deal, which is expected to close tomorrow, gives each Google shareholder nine shares of Apple stock. Obviously, Google will move into Apple's fancy headquarters. Google employees said, yeah, I bet you can tell through
context that this article was a joke. Why it was stored away on the Dow Jones newswire at all as a mystery, But due to whatever reason, the joke post escaped into the real world and then it caused a tiny amount of havoc for a very short while. Immediately after the news published, Apple's stock price jumped up to one fifty eight dollars. It took a few minutes before the price popped back down to one hundred fifty six dollars. According to the site nine to five mac, the culprit
for the jump asn't gullible human investors. Instead, it was high speed trading computer algorithms. That's right. Algorithms, as in sets of instructions are monitoring industry news and making corresponding trades on the stock market. They do so its speeds much greater than any human could hope to match. They can also act in large volumes, causing the market to
surge or crash for a short time. In this case, the algorithms responded to the news using natural language processing to suss out the most important details that Google would acquire Apple for nine billion dollars. The algorithms aren't smart enough to detect when news isn't actually real. It acted as if the news were legitimate, and the market responded accordingly as these algorithms began initiating trades at a frenzied pace.
This isn't the first time this has happened. On May SI, the Crash of two, also known as the Flash Crash, happened with a trillion dollar stock market crash. It lasted for about half an hour. Frequency trading algorithms were partly to blame, though the SEC determined that a stock trader initiated the events that escalated in the crash. This one was human directed, so we'll give it a pass as
far as blaming it on dumb artificial intelligence. In twelve, a company called Night Capital launched its own trading algorithms on the New York Stock Exchange. Unfortunately, someone must have missed an important bug during the testing phase of the technology. The algorithms began to buy stocks at high prices and sell them at low ones, which, as I understand it, is generally the opposite of what you actually want to do.
It took nearly forty five minutes to shut the system down, but by that time the company had lost hundreds of millions of dollars. Another incident in twelve raised concerns when the share price for Pete's Coffee and Tea rose five percent immediately after the market opened. That set off alarm bells figuratively speaking, and NASDAC halted trading of the company stocks. This suspected cause was a high frequency trading algorithm, though
it wasn't ever proven conclusively. The NASDAC exchange was forced to cancel many of the trades that happened in those opening moments. On the one hand, these algorithms can help traders jump on opportunities with unprecedented speed, which can result
in large benefits for their clients. On the other hand, computer programs can't always tell when things are going south and can rapidly accelerate the problem to catastrophic levels, affecting not just computer directed actions on the market, but human ones as well. In some cases, it might at least temporari lease in the company's valuation down the drain or through the stratosphere. Typically, these problems when caught early can be corrected with some fuss and bother, but without too
many other serious consequences. But sometimes, such as with Night Capital, the problems can destroy a company. That's all for today. To learn more about artificial intelligence, how high frequency trading works, and the tech behind the financial sector, tune into Tech Stuff. It's the twice week the series that takes a deep dive on all things tech. That's all for today, and I'll see you again soon.