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The editor-in-chief of Bloomberg News is apologizing. That's after admitting his reporters tracked how subscribers use the company's famous financial data terminals. The disclosure has caused an uproar in the financial services world. As NPR's David Folkenflik reports, the episode has roots both in Bloomberg's innovations in data management, and its corporate culture.
DAVID FOLKENFLIK, BYLINE: Founder and now New York Mayor Mike Bloomberg was so fixated on data that he liked to know when his employees came and went. So reporters have to swipe a smartcard not only when they arrive, but whenever they leave the office.
That fixation on data has been very, very good to the company. Bloomberg News is part of a confident and highly profitable corporation known for high ethical standards. At the heart of its business are the 300,000 or so Bloomberg terminals that sit on desks across the globe. Banks, hedge funds, government agencies, investors and others pay $20,000 a year per terminal, for the privilege of getting access to so much data.
JOHN GAPPER: In a way, it's like an all-you-can-eat buffet for financial traders. The intention is that Bloomberg will give them any information they need on financial markets, to enable them to trade.
FOLKENFLIK: That's John Gapper, a senior columnist for the Financial Times. He says the ability for investors to have real-time access to that data is fabulous, but subscribers have learned that convenience comes with a catch.
GAPPER: It's a bit of a shock to realize that the terminals that were sitting on traders' desks across Wall Street weren't just giving information but in a way, could also be used as monitoring machines to find out what those traders were doing.
FOLKENFLIK: Think of the Bloomberg terminal system like a little, closed universe that existed before the Web. Bloomberg wants to make it so compelling, you'd never log off. Chris Roush covered the beverage industry for Bloomberg in the late 1990s. He said Bloomberg terminals gave him and his colleagues cache.
CHRIS ROUSH: You were writing or reporting primarily for a Wall Street audience - bankers, analysts, buy side, sell side, short sellers, people like that; whereas if you worked at a daily newspaper, you were writing for a general audience that maybe wasn't too concerned about making money from the news.
FOLKENFLIK: A lot of investors also make trades directly through the Bloomberg terminals. Others chat all day through its message system. It's simple to look up contact information, or to see if someone signed in. But these terminals gave Bloomberg reporters advantages other reporters did not have and that clients were not aware of. Reporters could monitor, for example, whether a client searched more for information on international stock markets or corporate debts, even though they could not see which individual stocks were researched or to read people's internal messages.
In recent days, the New York Post disclosed that executives from Goldman Sachs confronted Bloomberg executives over concerns that reporters kept tabs on its employees. Then BuzzFeed reported that Bloomberg executives had promised to curb such behavior two years ago. These revelations have set off a frenzy.
(SOUNDBITE OF BROADCAST MONTAGE)
UNIDENTIFIED BROADCASTER #1: Bloomberg News is at the center of a spying story...
UNIDENTIFIED BROADCASTER #2: An incredible breach of...
UNIDENTIFIED BROADCASTER #3: ...the fed and treasury looking into how their Bloomberg machines may have been monitored in any way.
FOLKENFLIK: That was on CBS, CNN and CNBC, respectively. Chris Roush is now senior associate dean at the University of North Carolina's Journalism School. He says this flap will probably blow over.
ROUSH: In the end, these Wall Street traders and bankers are going to look at one thing and that is, can the Bloomberg service, can Bloomberg News help them make money?
FOLKENFLIK: Similarly, John Gapper says the amount of information actually available to reporters is modest. But he suggests the revelations carry a true risk.
GAPPER: Bloomberg is seen as being a very aggressive, relentless competitor; a very successful company; but a company with pretty strict ethical standards.
FOLKENFLIK: Journalists at other outlets view Bloomberg with awe and fascination. For the first time, Gapper says, they can discern an Achilles' heel as well.
David Folkenflik, NPR News, New York. Transcript provided by NPR, Copyright NPR.
