Earlier this week, a veteran Bloomberg News editor revealed that he resigned in early March, saying he did so because his company “unilaterally spiked” an investigative piece on China. (Backstory here.) The piece, which was allegedly quashed last November, was written by the same team that exposed the family wealth of now-president Xi Jinping in June 2012, which prompted the Chinese government to block Bloomberg’s website. That looked especially bad given that last week the chairman of Bloomberg LP implied that potential sales opportunities for its data terminal business in the Chinese market would trump editorial considerations.
The latest developments further aggravated anxiety within the Bloomberg newsroom about any commercial pressures on its journalism, and prompted finger wagging in the media industry. “Clearly, there needs to be a robust debate about how the media engages with China. That debate isn’t happening at Bloomberg,” said Ben Richardson, the editor whose resignation comes after Bloomberg’s suspension of investigative reporter Mike Forsythe, one of the reporters on the controversial story. (Forsythe later joined the New York Times.) Separately, New York Times CEO Mark Thompson accused Bloomberg of placing “commercial interests ahead of journalism,” reports the Financial Times (paywall). Bloomberg declined to comment for this story.
It’s all pretty messy for Bloomberg. And, there are plenty of other markets where it’s easy to foresee governments and big Bloomberg customers trying to pressure Bloomberg to curb its investigations. Among the most obvious: Russia, Pakistan, India, pretty much all of Southeast Asia, and a slew of Gulf countries.
While this might sound contrarian, the company over time likely has a lot more leverage to pursue both hard-hitting journalism and commercial success than its chairman Peter Grauer suggests.
Chinese state-owned enterprises have Bloomberg terminals, despite the fact that China has its homegrown terminal technology, called Wind. Even researchers at the People’s Bank of China (paywall), the country’s central bank, use them. They do so because they need access to them to compete. While Bloomberg’s competitors could benefit from the government’s dissatisfaction with the company’s reporting, it’s not clear that’s happening or ever will.
In fact, China needs Bloomberg a lot more than Bloomberg will need revenue from that market. As Chinese companies engage more with the global economy—particularly in complex things like currency and commodity trading—they’ll face an enormous competitive disadvantage without Bloomberg’s data and news.
And that’s with a closed capital account. As China opens up its financial sector, its reliance on Bloomberg for fast, accurate global data and news could only grow—and the Chinese government’s ability to block that flow of information will risk the collateral damage of its own companies’ losses.