Bloomberg, the Internet, and Trust
We’ve just begun to see the fallout from Bloombgerg LP that, in the word of CEO Dan Doctoroff, “Bloomberg News reporters had access to limited customer relationship management data through their use of the Bloomberg terminal.” In blunter words, Bloomberg reporters were using their access to terminal log information to spy on customers’ activities. Considering that Bloomberg’s customers are the titans of Wall St. and government and that they are typically paying $20,000 per terminal per year, I expect the consequences to be nasty.
But the issues go well beyond Bloomberg. The internet, and society in general, operates as a network of trust that demands that certain lines never be crossed. Email providers have access, at a minimum, of extensive information on who you are exchanging mail with and often to the contents of the messages as well; you assume, without even thinking about it, that your email host is not selling the information to your competitors. You mobile phone service also has extensive records about both who you have called and where you have been. You assume these records also stay private. Bloomberg crossed that line. There are good technical reasons why the company–or any service provider–needs to collect log data that can reveal a good bit about client activity. And there are good legal and ethical reasons why that information must remain tightly restricted.
Breaches have, of course, occurred in the past. When I worked for BusinessWeek, we had a leak of market-moving information. employees of one of our printers were selling advance copies of an Wall Street column to traders. It turned out that one editorial employee was using the same information to trade on his own; both the printers and the editor went to jail. The electronics age makes this sort of thing both easier to do and harder to stop.
What remains to be seen in the Bloomberg case is just how widespread the practice was, exactly what information reporters had access to, what senior executives knew about it, and how long it went on. The initial damage will be to Bloomberg, but this episode (along with mounting reports of extensive government snooping on citizens) further weakens the delicate fabric of trust that lets the economy and society work.