Move aside, News Corp., says Adam Penenberg at PandoDaily. Now it's media giant Bloomberg's turn to be embroiled in a spying scandal. Last week, we learned that for years Bloomberg reporters have been monitoring how subscribers use their Bloomberg terminals, the ubiquitous computer system financial players rely on to "execute trades with vast sums of money at stake." All the reporters had to do was "hit the 'Z' function" to see which employees of Goldman Sachs and JPMorgan Chase — or government officials like Tim Geithner and Ben Bernanke — had logged on, and even how often "they checked out corporate bond trades or equities indices." These intrusions allowed Bloomberg reporters to tell when a beleaguered trader or partner "had gone silent on the terminal" — perhaps because he'd been fired.
"The error is inexcusable," said editor-in-chief Matthew Winkler at Bloomberg. "Our reporters should not have access to any data considered proprietary," and last month we changed our system so they don't. But it's important to point out what limited data our reporters had access to. They could see a user's login history, helpdesk inquiries, and some aggregate user function data — "akin to being able to see how many times someone used Microsoft Word vs. Excel." But they never had access to clients' messages, and they "couldn't see the stories that clients were reading or the securities clients might be looking at." Still, as we tell our reporters and editors, the mere appearance of impropriety is enough to damage a reputation, and we apologize.
It's not that easy, says Zachary M. Seward at Quartz. "At Bloomberg, omniscience is a feature, not a bug." Monitoring terminal users' data has long been part of an obsession with controlling and using all available data at the company, where "stalking is simply part of the culture." Employees can keep tabs on each other, checking when someone scans — or "badges" — out of an office, and management is said to log every keystroke to track staff and outside customers. That Bloomberg culture explains how hundreds of people at the company could spy on customers "without batting an eye." In fact, this suddenly "inexcusable" practice highlights a key to Bloomberg's phenomenal success. "Data comes into the company — as much as possible, from wherever possible — but it doesn't leave because, at Bloomberg, information is money."
This scandal won't stop that flow of cash, says Kevin Roose at New York. Subscriptions for terminals make up roughly 80 percent of Bloomberg LP's revenues, which came to $7.9 billion last year. But even if it were shown that reporters had been snooping into terminal data "with a wanton disregard for client privacy," clients wouldn't flee. Wall Street simply wouldn't function without the Bloomberg terminals, which serve as "an entire information ecosystem, into which a generation of Wall Street traders have wrapped their habits and routines." Clients may stomp, pout, and renegotiate their contracts, but once "a few pro forma steps are taken to put clients at ease, it will be back to business as usual for Bloomberg."