Did Bloomberg reporters “snoop” on clients? Depends on what you call snooping

Bloomberg LLC, which supplies news and data to the world’s financial elite, has been embroiled in a growing uproar over its reporters’ use of the company’s technology to report on client activity — leading the New York Times to proclaim that Bloomberg admitted to “snooping” on clients.

In case you missed it, the controversy began on Friday, when the New York Post reported that merchant bank Goldman Sachs was annoyed that Bloomberg reporters were tracking employees’ log-on activities. The matter soon gained steam when BuzzFeed reported that Bloomberg brass had long known about the practice, and with the news that the Fed and Treasury were investigating the situation.

The company stonewalled at first but on Sunday, Bloomberg News editor-in-chief, Matthew Winkler, addressed the situation in detail:

“Our reporters should not have access to any data considered proprietary. I am sorry they did. The error is Bloomberg4inexcusable,” wrote Winkler in a blog post. The rest of the post, however, amounted to a pushback; Winkler explained that the practice was nothing new, and that reporters only tracked “mundane” information.

As bad as voicemail hacking?

So what to make of all this? Did Bloomberg engage in sinister “snooping” (one NYU journalism prof has already compared the incident to the infamous phone hacking conducted by News Corp in Britain)? Or is just this a tempest in a teapot egged on by Bloomberg’s competitors in the news media?

The answer is somewhere in between. On one hand, Bloomberg reporters didn’t do anything approaching the UK scandal — monitoring bankers’ log-in activities is nothing like breaking into a dead girl’s voicemail. Moreover, the Bloomberg “tracking” appears to have done little more than confirm if someone still worked at a certain company. As a source told BuzzFeed’s Peter Lauria, “LinkedIn Pro is more useful and has better information for finding sources and helping to break news.”

All this suggests that some of the the fuss is not about what Bloomberg reporters actually did, but instead is tied to secretive nature of the company itself. This is reflected in a Quartz report that characterizes Bloomberg as “a black box” and portrays a data-obsessed, almost cult-like corporate culture.

News and power of the platform

On the other hand, the Bloomberg episode does raise ethical concerns over how proprietary platforms — including Bloomberg ipad appnot just Bloomberg but also LinkedIn(s lnkd) or Facebook(s fb) — should handle customer data for news purposes.

The issue isn’t just academic. More and more, platforms are relying on news (think of “LinkedIn Today”) to keep users on their sites. And, as Bloomberg journalists know, customers’ activities on those platforms can be a source of news — and better yet, a source of exclusive news.

The question is where this all this should stop. Would you like reporters to know when you suspend newspaper to go on vacation? Probably not. Would you like your cell phone carrier to use the location of your calls as a source of news? Definitely not. The Bloomberg episode, therefore, appears to be less of a snooping scandal than it is a cautionary tale about what can happen when the line between a company’s news and data gathering operations get blurred.