Takeaway From Arrington Startup Saga: AOL Is Looking Sleazy

Also, disorganized. So many different stories. Here's a quick explanation

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When Michael Arrington announced he planned on starting a venture capital fund using money from his employer AOL, it sounded like a giant conflict of interest to us. But then it seemed like maybe he was only kind of sort of staying on with TechCrunch, the AOL-owned blog--"reports suggested Arrington would remain at TechCrunch and AOL with only a title change – from 'editor' to 'founding editor and writer,' Business Insider's Nicholas Carlson and Henry Blodget explained. That was still pretty shady. Then last night AOL changed its tune: Arianna Huffington herself said that Arrington no longer works at TechCrunch--making things a bit better. Yet it was unclear if AOL still employed him and since Arrington would continue to blog, it looked like an empty gesture. This morning AOL clarified that AOL no longer employs Arrington, period: Huffington Post spokesperson Mario Ruiz said this, again to Carlson and Blodget at Business Insider. Now the latest development has Arrington still employed by AOL, working for AOL Ventures--that one came from AOL's SVP of corporate communications Maureen Sullivan, again to Business Insider. As we wait to see just how involved Arrington will remain, as a media company that should supposedly hold up some sort of journalistic ethics, AOL is coming out looking quite sleazy.

Of course having Arrington at the helm of a blog that covers the firms that he would invest in as well as support the fund presents a big, fat conflict of interest, and AOL should've anticipated that. AOL could have quelled initial outrage by employing a different order of operations, explains AllThingsD's Kara Swisher. "This could have been a lot cleaner, of course, by Arrington simply resigning from TechCrunch, becoming a VC and perhaps starting a new blog where his agenda is much clearer, from which he could huff and puff away as he does with much entertaining gusto at real and (mostly) imagined slights." But of course it didn't go down like that, and with each new development contradicting the next, AOL's image as an ethical media company deflates.

And given all of the back and forth, it looks like Arrington will remain somewhat involved--even if he's not blogger-in-chief by name, his new positioning as "contributing blogger," or part of AOL Ventures, or what have you, still smells a bit fishy. Before CrunchFund, Arrington not only broke and was the source for many tech stories on the site, but he also attracted entrepreneurs to invest. Swisher's pretty sure that won't change. Without Arrington's aura and connection, TechCrunch loses value. The title change means little, adds VentureWire editor Scott Austin in a tweet. "It's like a manager ejected from the game but still calling the shots from the clubhouse." And it doesn't help that Arrington has put a clause in his limited partnership agreement that he can report on anything he likes he likes, and in any way, about his investors and their companies, however confidential, except those he invests in, Swisher continues.

Maybe Arrington will defect completely, probably not--we'll keep updating as the story evolves. But AOL should've known better--and it makes you wonder what the future of journalism is at the media corporation.

Update 12:46 p.m.: Arrington doesn't even know if he works for AOL anymore, he told The New York Times. "I have no idea what AOL’s final position on this will be. I look forward to hearing it. I’ll respond once Arianna has made her last statement."

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