It says something about the seriousness of the rest of the news during the past several days when a story about unethical spying by reporters working for a company founded and built by the current mayor of New York City barely makes a ripple.
It has been alleged, and now admitted, that Bloomberg reporters monitored terminal login activity to develop stories about possible Wall Street executive departures before anyone else outside the entities involved knew and for other news-gathering purposes. The practice appears to go back to when Gotham Mayor Michael Bloomberg was still at the helm of Bloomberg LP, as seen in the bolded sections in the excerpt from a Saturday CNBC news story which follows the jump:
Wall Street: How Much Does Bloomberg Know?
The escalating controversy over Bloomberg reporters accessing private information on Wall Street through the company's terminals puts the data and media empire founded by New York City Mayor Michael Bloomberg into strange, new territory. It is now in the rare position of having to explain its actions to an industry that puts billions of dollars into its coffers every year.
Since news of the privacy breach broke on Friday, some of Bloomberg LP's biggest customers on Wall Street are re-examining their agreements with the company to see how much information the company can access from desktop terminals, say sources at those firms. Goldman Sachs Group and JP Morgan Chase so far have complained about the practice of Bloomberg reporters being able to see when one of their employees is signed on and what kinds of functions they use through keystrokes on the terminal.
"It's pretty surprising that an organization this big has given that kind of open access to user information," said Larry Tabb, founder of Tabb Group, a financial markets research and advisory firm. "This is going to be a challenge for Bloomberg. This hole should have been locked down."
... Beyond Wall Street firms, customers of the more than 300,000 leased Bloomberg terminals across the globe include clients as prominent as the Federal Reserve and the Vatican. As Bloomberg executives acknowledged the privacy breach as a "mistake" and tried to downplay the controversy, it was still not clear how widespread the practice of peeking into customer terminals was among Bloomberg reporters. Bloomberg has said it has discontinued allowing reporters to access subscriber information.
"I think this caught (Bloomberg LP) blind-sided because there has been this kind of access for 20 years or so," said one former Bloomberg LP executive, who wished to remain anonymous. "I think they just forgot reporters had this kind of access, until now. Or maybe they are Machiavellian enough that they said let's keep it on until somebody discovers it."
The origins of this access may have started first when Bloomberg, as a demanding CEO, mandated that every employee in the company, from sales persons to journalists, call a client once a quarter and ask them if they were having any issues, or needed any help.
Though sales and client service are obviously crucial functions, journalists should not be involved in such client contacts. The fact that Bloomberg didn't understand such an obvious point makes it quite easy to believe that he didn't see a need to limit reporters' access to client user activity, as someone making a client service call would ordinarily benefit from having such access to address client concerns which might arise during the quarterly calls.
It's also quite credible that, as considered in the excerpt, Bloomberg could have been sufficiently Machiavellian to make reporter access available even after internal warnings in the hopes that nobody would catch them, or that when caught they could just do a mea culpa and move on.
It's hard to imagine that there isn't a legally problematic aspect to all of this, especially given the alleged spying on the Fed and former Treasury Secretary Tim Geithner.
There are other competitive platforms. I suspect that Bloomberg clients are giving them serious consideration.
Why should anyone be surprised that a mayor who seems almost daily to either restrict his citizens' freedoms, talk about how the people in this country need to get used to less freedom, or both, would have no problem with his company's obviously unethical and possibly illegal practice?
Cross-posted at BizzyBlog.com.
