Bloomberg is watching you

By Felix Salmon
May 14, 2013

All social networks are based on a cognitive con. No one likes to give out valuable personal information to some huge corporate entity, so the trick is to make people feel as though they have some kind of control or ownership, even when they don’t. Most of Facebook’s privacy controversies boil down to much the same thing: people share personal information with their friends, using the convenient Facebook platform, and then are shocked when it turns out that Facebook has access to that information and is making money from it.

The more centralized and controlling a social network is, and the less that it’s run on a peer-to-peer basis, the more likely it is to run into this kind of trouble. So it probably should come as little surprise to learn that Bloomberg, the highly-centralized and highly-controlling social networking company, has now run headfirst into its very own privacy scandal. (Bloomberg is a competitor of Thomson Reuters, which is my employer and owns Reuters News.)

The Bloomberg terminal is a take-it-or-leave-it proposition, as far as its users are concerned: they either sign on the dotted line, pay their $20,000 per year, and get their terminal — or they don’t. Just as with Facebook, the Terms of Use are non-negotiable: unless you agree to them, you don’t get to use the service. And as everybody who’s ever tried to put a naughty word into a Bloomberg message knows, once you’re signed into the Bloomberg system, Bloomberg is watching you.

Zach Seward‘s sources say that Bloomberg logs every keystroke of every customer; Bloomberg declined to comment to Seward and declined to comment to me, so it’s hard to know what the truth is. But it’s well known that Bloomberg accumulates a truly enormous amount of information; right now, for instance, it says it is hiring big data architects in an attempt to manage it all. That dataset is one of Bloomberg’s great competitive advantages.

Indeed, Bloomberg’s clients in many cases may want it to implement Panopticon-style monitoring of everything their employees do. As Seward says, “at Bloomberg, omniscience is a feature not a bug”: even if the individual employees aren’t enthusiastic about losing all their privacy, their employers, institutionally, see a lot of upside, in terms of compliance and risk management, in keeping a record of everything that their workers do online. If Bloomberg will help do that work for them, included in a terminal subscription they’re going to pay anyway, then so much the better.

Besides, both Bloomberg and its clients have an aligned incentive when it comes to making the terminal as excellent as possible in terms of giving subscribers the information they want as quickly and comprehensively as possible. You can’t do that unless you know how clients are using the terminal — what they’re looking up, where they’re getting frustrated, where they spend most of their time. By sharing usage data and trusting Bloomberg to keep it confidential, subscribers can help make the product even better.

But journalists are a special case. As Bloomberg editor in chief Matthew Winkler says, Bloomberg’s “reporters should not have access to any data considered proprietary” — and it is “inexcusable” that they did. The problem derives from Bloomberg’s in-house news organization priding itself, at least at the outset, on being deeply embedded into the broader company, and making the maximum use of the information on the Bloomberg terminal.

Bloomberg News’s Kevin Reynolds, for instance, talking to Brill’s Content in 2001, boasted that “as a reporter here, you have knowledge going into the interview that your competitors don’t even have at the end,” thanks to the information in the terminal. And in case there was any doubt that, as Amy Chozick writes, “the news operation was assembled in the 1990s primarily as a way to sell more terminals,” it was laid to rest by Mike Bloomberg himself, in his autobiography. “Most news organizations never connect reporters and commerce,” he wrote in Bloomberg by Bloomberg. “At Bloomberg, they’re as close to seamless as it can get. That’s our system.”

In that context, it was absolutely natural for journalists to have access to the same data being seen by the sales staff: at Bloomberg, the reporters were deliberately tied as closely as possible into the commercial terminal-sales function. Too closely, it turns out. As times changed, and, in Winkler’s words, “as data privacy has become a central concern to our clients,” it became necessary for Bloomberg’s journalists to be completely removed from client data. They weren’t, and, as Bloomberg CEO Daniel Doctoroff writes, “although we have long made limited customer relationship data available to our journalists, we realize this was a mistake.”

So, Bloomberg says it made a mistake, it has apologized, and it is not going to happen again. End of story? Not entirely. For one thing, the Europeans have pretty strict privacy laws, and are talking to Bloomberg about what happened; no one knows how those talks could conclude. On top of that, for all that Winkler’s apology runs under the headline “Holding Ourselves Accountable,” so far there have been no reports that anyone at Bloomberg is being held accountable. A Bloomberg spokeswoman declined to comment.

Bloomberg’s reporters use the Bloomberg terminal for everything they do: they’re an inextricable and central part of the Bloomberg social network. And while the newsroom has now lost its access to certain functions, the company would not comment on the degree to which the changes are affecting the vast majority of Bloomberg employees who don’t work in the newsroom. For the time being, it seems, thousands of Bloomberg employees around the world have retained their access to key information about employees of Goldman Sachs, the Federal Reserve, the ECB, the US Treasury, and countless other organizations — information which, in many cases, is fiercely protected even within the organizations themselves. (If an employee has been quietly suspended and is no longer actively working for the organization in question, that’s not going to be common internal knowledge, but it’s easy to see if you can see when they last logged in to their Bloomberg.)

Many of Bloomberg’s clients, especially the Europeans, are likely to be unhappy about the fact that such sensitive information could continue to be widely available within the company. But, just like participants in other social networks, they don’t have a lot of choice in the matter. The more time you spend on your Bloomberg, the more value you get out of it — and the more that Bloomberg staffers are going to know about when and how you work. That’s been the bargain from the beginning, whether you liked it or not.

5 comments

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Here’s another scenario you should look into: credit card companies, cable tv companies, etc. who snoop on their customers, package up the data, and sell them to banks and hedge funds. Sounds like banks want to have it both ways.

Posted by junkcharts | Report as abusive

Have Bloomberg customers started using interns to create fake activity on the terminal so they can cover their tracks?

Posted by guanix | Report as abusive

I think the days of “privacy” actually being reality are passing away before our very eyes (if they haven’t already died). Unless you are non-existent online, your information is the world’s information. Unfortunately our world serves the bottom dollar, which is what our information then serves. If only we could have the same kind of transparency within businesses and governments for the people to have the same access to information on those entities as they have on the people. If privacy is going away, let’s make it go away for institutions as well as the rest of humanity.

Posted by saunsea | Report as abusive

Expectable right, the company is trying to make money off its customers.
Too bad we’ve started to realise it too late. Now all of these businesses are using their clients information as freely as they want.

Posted by theAntagonist | Report as abusive

Doesn’t Reuters offer somewhat analogous financial data services? How does it work there? It would seem an obvious point of comparison.

Posted by alexh | Report as abusive