The Panopticon of Finance: Why Bloomberg Is Always, Always Watching

Is the Bloomberg terminal scandal truly scandalous, or just an open culture of "transparency" gone too far?

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At Bloomberg, omniscience is a feature not a bug.

The company's New York City skyscraper unfurls around its courtyard like a panopticon. Inside, the decor is punctuated at every turn with fish tanks. No one has an office to hide in, and the meeting rooms are enclosed in clear glass.

Visit any of Bloomberg's 192 offices, and you are forever stored in the system; come back years later, on the other side of the world, and the same photograph will grace your name tag. Employees carry two IDs. The first gets them into the building, logging their locations for anyone on staff to look up. The other--which some Bloomberg customers use, as well--is called a B-Unit, for biometric: It reads their fingerprints to permit home access to their terminals.

The terminal. Nothing captures Bloomberg better than these machines, though these days, it's usually more accurate to call them pieces of software. A terminal costs about $20,000 a year and, with 315,000 subscriptions around the world, accounted for the bulk of the company's $7.9 billion in revenue last year. Up-to-date sales figures and other data about the terminals are displayed on screens throughout Bloomberg's offices.

The promise of the terminal, which it more-or-less fulfills, is quick and unlimited access to any information that might possibly make you money, from credit default swap spreads to sports betting odds. What's going on at the largest American oil reserve, which holds the crude sold on the New York Mercantile Exchange? Bloomberg commissions a satellite to fly over the site in Cushing, Oklahoma, twice a week and take a picture. Any terminal customer can access the photographs along with estimates of the amount of oil held in the tanks based on the length of the shadows cast across their roofs.

Each of Bloomberg's more than 15,000 employees has a terminal, its iconic keyboard and twin screens making the offices resemble a trading floor, and is encouraged to use it as much as possible. Many core functions of the company are conducted with the terminal. Bloomberg's 2,400 journalists use it to maintain a collective database of sources--contact information, details like children's names and accolades, and a record of every conversation with that person.

And as the rest of the world just learned, all employees--including, until recently, Bloomberg reporters--have access to potentially sensitive information about terminal users: the last time they logged in, the commands they use, and their chats with customer service. Bloomberg staff have had such access for years.

The company revoked its journalists' ability to see the data after complaints from one of the company's biggest customers, Goldman Sachs, which claimed Bloomberg News was using the information to aid its reporting about the bank. Bloomberg CEO Dan Doctoroff, seeking to mollify jittery customers, most of whom work in the obsessively secretive world of finance, called the access for reporters "a mistake."

Inside the Bloomberg Tower, though, the controversy is being met with bafflement by some employees and, they say, executives. The ability to see data about terminal usage by customers was considered an open secret. A Bloomberg TV anchor mentioned it on the air in 2011, and an initial analysis by the company is said to show that "several hundred" reporters took advantage of the access. The information seemed, to some, of a piece with Bloomberg's broader culture of what it calls "transparency," considered a key to the company's success.

Reporters, meanwhile, are bred to make use of any information they can get their hands on, and this stuff was just sitting on their computers! A chapter in The Bloomberg Way, the bible for its journalists, begins, "If we don't know the people on our beats, what they do, where they're doing it, when they're doing it, and how they do it, we don't know our beats."

Within the company, stalking is simply part of the culture. Employees can look up--using the <FON> function on their terminals--the last time anyone scanned into or out of a Bloomberg office, which they use to keep legitimate tabs on coworkers and, more voyeuristically, to track their executives on business trips ("Winkler just badged out of Tokyo!"). Some staff make a habit of looking up the last time Michael Bloomberg--the company's founder, longtime chief executive, and now mayor of New York--visited his family's foundation, which uses the same security system.

Many current and former Bloomberg employees say they have been told the company keeps a record of every action taken on a terminal, whether by staff or outside customers, in a practice known as keystroke logging. The data are closely held within the company but can be used for everything from assisting customers with their machines to investigating employees for violations of their confidentiality agreement.

There's no evidence the keystroke data have ever been used for Bloomberg reporting. Keystroke logging is commonly used by companies to monitor staff, but Bloomberg customers may not be aware their terminal usage is so finely recorded. Bloomberg spokesman Ty Trippet declined to comment on the practice.

On Saturday, CNBC reported that the US Federal Reserve and Treasury department were looking into Bloomberg terminal usage snooping of their employees. "We have had no formal inquiries from government or regulatory bodies," Trippet told Quartz. Bloomberg said on Friday it had created a new role of "client data compliance officer" to ensure that customer information was no longer available to its reporters.

The breadth of information the company possesses about its customers may raise privacy concerns, but it's also the envy of Bloomberg's competitors and a model for many startups in technology and media. Bloomberg was hardly the first company to use open-plan offices, collect loads of data about its customers, and make that information available across the organization, but it popularized those practices and obviously found great success in them.

The San Francisco office of payments startup Square looks like a miniature version of Bloomberg's headquarters, from the curved couches to the screens displaying data about the company above everyone's desk. In New York, when Dow Jones recently hired its new chief excutive, Lex Fenwick, from rival Bloomberg, he spent the first several months tearing out offices on the executive floor to create an open-plan layout, launched a new initiative focused on customer service and data, and generally made the place feel like a copy of the Bloomberg building 10 blocks to the north. A mantra of CEOs throughout the media industry these days is more data about customers, more readily available throughout the company. They don't add, like Bloomberg, out of pride or perhaps because it's obvious.

It's not as though any of this justifies Bloomberg reporters snooping on customer terminal usage, but it should help explain how someone--indeed, hundreds of people--at the company could do it without batting an eye. And it points to a tension between Bloomberg's culture of openness and its intense secrecy to the outside world. At Bloomberg, transparency only goes as far as the door. To the rest of the world, the privately held company is more black box than fish bowl.

The confidentiality agreement that every employee must sign--including reporters, which is unusual in the media industry--is just part of it. They also generally must agree not to say anything critical about the company while employed or after leaving. Bloomberg staffers are genuinely terrified of talking about their company to anyone who doesn't work there, a fear that was recently justified when Bloomberg immediately fired its social media editor after his private conversations, in which he called the company a "total mess," leaked online. When a Bloomberg staffer wanted to rat on his "Big Brother" employer to gossip blog Gawker last year, he wrote it all down on paper rather than create a digital record.

As a result, the public doesn't hear much from Bloomberg LP, outside of occasional updates on terminal sales. In a sense, the paradox of Bloomberg's transparency and secrecy actually describes its business model quite well: Data comes into the company--as much as possible, from wherever possible--but it doesn't leave because, at Bloomberg, information is money.

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Zachary M. Seward is a senior editor at Quartz. He previously worked at The Wall Street Journal and Harvard's Nieman Journalism Lab. He teaches digital journalism at NYU.

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