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| Bloomberg subscriber Winston Smith huddles out of line of sight of his $20,000 per year Bloomberg Terminal so it can't watch what he scrawls in his diary |
From the New York Times:
More Clients Ask Questions of Bloomberg
By AMY CHOZICK and BEN PROTESS
With new concerns emerging about practices at its news division, Bloomberg L.P., the sprawling financial services company founded by Michael R. Bloomberg, scrambled to shield its lucrative terminal business and appease nervous customers.
The report on Friday that a Bloomberg reporter had used the company’s financial data terminals to monitor a Goldman Sachs partner’s logon activity has set off a ripple effect of inquiries from other worried subscribers, including JPMorgan Chase, Deutsche Bank, the Federal Reserve, Treasury Department and the European Central Bank.
The revelations now stretch back to 2011, when UBS complained after a Bloomberg Television host alluded on air to his monitoring of the London-based rogue UBS trader Kweku Adoboli’s terminal logon information to confirm his employment status at the bank.
Then, last summer, executives at JPMorgan Chase questioned Bloomberg reporters’ techniques after they were among the first to report on the trader Bruno Iksil, nicknamed the London Whale. “I’m unaware of any record of a complaint from either bank on this issue,” said Ty Trippet, a Bloomberg spokesman.
Citigroup and other Wall Street banks have also contacted Bloomberg in recent days, according to these people, who spoke on the condition they not be identified discussing confidential conversations. The banks all declined to comment. In response, the company has been contacting subscribers.
... Bloomberg subscribers pay on average about $20,000 a year to lease each terminal.
So, Bloomberg customers pay annually about an order of magnitude more to rent a terminal that you can buy a MacBook Air for down at the Apple Store?
Mr. Bloomberg, who stepped away from day-to-day operations when he became mayor, declined to comment on the situation at the company that bears his name. “No, I can’t say anything. I have an agreement with the Conflict of Interests Board,” he said in a news conference on Monday.
Well, that's reassuring. The billionaire mayor can't talk about conflicts of interest because he has an agreement with the Conflict of Interest Board. Really, in the big picture, isn't the entire concept of "conflict of interest" so 20th Century? All this old-fashioned stuff about conflict of interest is really disinteresting to modern people like Mayor Bloomberg, and you should be disinterested in obsessing over it too.
The company also began to discuss possible legal ramifications. While people close to the company doubted that clients would threaten legal action,
The clients aren't likely to threaten to sue? For that to be true, the clients, who include world-historical vampire squids like Goldman Sachs, must be absolutely terrified of just which of their secrets Bloomberg has snooped from them.
Bloomberg hired outside lawyers on Friday to steer it through the crisis. The lawyers, according to the people close to the company, have assured Bloomberg that there is no basis for a lawsuit, since the subscribers did not suffer any damages and the information obtained was more trivial than confidential. An early analysis conducted by Bloomberg further suggested that reporters rarely, if ever, published stories based solely on information gleaned from the terminals.
There's a lot of lawyerese in that sentence: few stories "based solely" ... Anyway, if I were CEO of Goldman Sachs, I'd be a lot more worried about the secrets Bloomberg didn't publish, the ones' that were too valuable to let the reporters have, the ones that got locked away in that special safe at Bloomberg HQ (or, maybe, that safe in the mayor's office).
The people close to the company also noted that Bloomberg’s sales agreement with subscribers disclosed that company employees had access to certain private information. While the agreement did not specify that Bloomberg News reporters were among those with access, the journalists are technically employees of Bloomberg L.P.
It's not the journalists at Bloomberg L.P. that I'd be that worried about if I were, say, Lloyd Blankfein.
But some bank executives said the snooping could have violated a common confidentiality clause in their contracts with Bloomberg. In the clause, Bloomberg promises to keep large swaths of information “in confidence,” meaning that it won’t be shared with “third parties.”
So, Bloomberg has promised not to let anybody else know what it knows. Now, that's reassuring!
One Wall Street executive, who asked not to be named because of a firm policy prohibiting employees from speaking to the media, said his company was involved in a sensitive situation last year and he now wondered if reporters were monitoring his activities.
“Looking to see who is in or not is sleazy but hardly earthshaking,” he said. “But if they knew what stocks I was clicking on and what yields I was looking at, that is spying.” (Bloomberg officials have repeatedly said the functions used by reporters did not provide information on specific trades or securities.)
Like I said, reporters might be the least of my worries about who at Bloomberg knows what about my private business.
Another top Wall Street executive, who also asked not to be named, said although he did not know if his firm would take action, he planned to raise this issue with his board. “I don’t like it when something happens that hasn’t occurred to me, and this had not occurred to me,” he said. “I feel violated.”
I'm not sure exactly what he just said, but he seems to feel strongly about it.
... Bloomberg has at least 315,000 subscribers
at $20,000 per year that's $6.3 billion in annual revenue from a business model that sounds like it was obsolete about a year after the World Wide Web came along
and its proprietary terminals reign supreme on most traders’ desks. But the business Mr. Bloomberg pioneered took a hit during the financial crisis of 2008.
Even as Wall Street recovered, some financial institutions questioned the steep price of the terminals. The price tag, combined with the breach of privacy accusations, have aggravated tensions between Bloomberg and its subscribers, several Wall Street executives said.
The concerns also presented a rare opportunity for Bloomberg’s competitors to challenge the behemoth. ...
Because the federal government anti-trust enforcers would never presume to do that. Who knows what Bloomberg has on them?
What is more, a report in The Financial Times that a former Bloomberg employee had leaked online thousands of messages from a single day in 2009 and a week in 2010 between terminal subscribers threatened to further fray trust between Bloomberg and the hedge funds, investment banks and money managers who use the service. ...
The Wall Street executive who expressed concerns over being spied upon by Bloomberg said the price the company charged for service added insult to injury.
“They pretty much have a monopoly,” he said. “I am fed up and now they do this. I honestly would pay as much for three-quarters of the data just to get away from them.”
Commenter NOTA says:
Dear God, there is a wonderful SF story in there somewhere. Once, just as a civilization was reaching its information age, a particular group of people saw their opportunity and built special information terminals that only the very most rich and powerful people in the society could have, and got this terminal accepted as the marker of membership in the power elite of the planet. And then, control of what went on those terminals, and knowledge of who looked at what on them, turned out to be a source of almost unlimited power, and those terminals' makers became extremely powerful.
Oh, come now, NOTA, Michael Bloomberg is merely the three term mayor of New York City (sure, there was a two-term limit, but that was made to disappear -- he's Michael Bloomberg, for heaven's sake, not some normal New York City mayor who has to obey term limits) and the seventh richest man in America. He's not President of the United States. He's only seriously looked at running for President a few times. If he had judged that it would be in his interest to be President, you'd have been informed of that fact.
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