An announcement transmitted by PRWeb, a website that distributes press releases for a fee, said Google had acquired ICOA for $400 million.
PRWeb said the release was planted by someone falsely claiming to represent ICOA, CNN reported Wednesday.
"Even with reasonable safeguards identity theft occurs, on occasion, across all the major wire services," PRWeb said on its company blog.
"We have removed the fraudulent release and turned the matter over to the proper authorities for further investigation."
Financial experts said the hoax was likely an illegal effort to inflate ICOA's stock, which jumped in price dramatically Monday with hundreds of millions of shares being bought and sold before the stock was frozen.
The incident shows how reporting can go wrong in the fast-paced world of Web journalism, media experts said.
"With something like this, there are a lot of blogs and websites that build their reputation on the tech world," Kelly McBride at the Poynter Institute, a non-profit devoted to the study and teaching of journalism, said.
News outlets such as The Associated Press and tech-watching site CNET had carried news of the purported Google-ICOA purchase.
"If Google is spending $400 million to buy something, there are people who are expected to have something to say about that and they want to be in that mix," McBride said.
"Once one organization does it, other organizations tend to place even more blind faith," she said. "Once the AP [for example] does it, then everyone does it."
The Associated Press retracted and issued a correction for its story. CNET apologized to its readers.
UPI did not report the hoax.