Bloomberg terminals have become pretty much indispensable to investors, and one of the key reasons, besides their news and data, is their private chat feature, where much of Wall Street’s conversation happens. Since the company’s journalists were caught peeking at data about users’ activities, the users have somewhat lost trust in that privacy. But is that enough to pave the way for a new player?
Financial-data firms Thomson Reuters and Markit—with some support from Goldman Sachs, Deutsche Bank, and maybe JP Morgan—certainly think so (paywall). They’re reportedly launching a venture called Open Federated Chat to compete with Bloomberg’s chat. But the new service will have a lot to live up to.
Alternatives to Bloomberg chat are already out there, the most prominent offered by Thomson Reuters itself since 2002. In fact, according to a source, Thomson Reuters Messenger has long been part of the media giant’s plans to win back Wall Street from Bloomberg—well before the Bloomberg snooping scandal.
“They know that they can’t match the data side,” said the source, who had access to data on Reuters’ Messenger but spoke to Quartz on condition of anonymity. “But Reuters is much stronger in Europe and Asia [relative to its performance in the US], where the Bloomberg terminal hasn’t had as much penetration. Reuters Messenger is really popular there.” The existing technology is expected to serve as a jumping-off point for Open Federated Chat; the main difference seems to be that the new service will have the backing of Markit and major banks.
Thomson Reuters gives Messenger to Wall Street users free of charge, both as a standalone platform that synchronizes with chat networks like AOL and Yahoo, and as part of Reuters’ Eikon terminal interface. It offers more features than Bloomberg’s chat service, particularly in its chat rooms. The most recent of these, launched in January of this year, was the Global Markets Forum, which is run by a handful of Reuters editorial staff. Like the existing Global Oil Forum and Global Ags Forum, it encourages users to banter about the markets. Big-name economists and investors like Société Générale’s Kit Juckes and HSBC’s Steven Major are invited on to stimulate the discussion. Other chat rooms are locked to journalists.
Like Messenger, Open Federated Chat’s key advantage is that it won’t have to be attached to an expensive terminal. “I don’t think [OFC] will kill the Bloomberg terminal dominance, but it could lead to more sharing of machines by adjacent subscribers,” a former banker and current Bloomberg user who goes by IvantheK told us in an email. In other words, if employees who have Bloomberg terminals can chat securely to those who don’t, financial firms may not feel the need pay a $20,000-a-year Bloomberg subscription for each employee.
Although firms already have that option if they use Messenger, Reuters is evidently hoping that the scandal around Bloomberg will convince more of them to adopt OFC. A spokeswoman for Reuters said that Messenger’s “open philosophy on bringing the marketplace together” would make it attractive if a number of banks decided to adopt the technology en masse, though she wouldn’t confirm reports on the new OFC service or banks’ interest in it.
However, if OFC isn’t much different from Messenger on the technical level, it will face an uphill struggle. Thomson Reuters Messenger looks eerily similar to Yahoo Messenger a decade ago, and it rarely works on Apple computers (this writer tried it out). Former Reuters employees we consulted criticized its reliability. Also, banks may like the fact Thomson Reuters Messenger lets them limit employees’ access to certain functions; Reuters maintains a “blacklist” of banks who must approve employees’ requests to enter chat rooms, for instance. But from the employees’ point of view, this is a drawback—although Citi announced that it will kick forex traders off its internal chat rooms (paywall), Bloomberg chat service for most users remains unrestricted.
Admittedly, technical glitches can be fixed, but one of Bloomberg chat’s main selling points is that, while it may not be pretty, it just works—and on all devices. Some 190,000 financial professionals are already signed up to Messenger, exchanging 11 million messages per day. By contrast, Bloomberg boasts more than 315,000 terminal subscribers, exchanging 200 million messages per day. If Messenger were a serious contender, one might expect it to have made more of a splash by now.
And even if OFC is head-and-shoulders better than Messenger, promises more privacy for its users, and takes advantage of banks’ desires to cut costs, displacing Bloomberg chat is a bit like displacing Facebook; it’s so well entrenched that even a service with clear technical advantages would have trouble winning people over. So far, we’re not convinced.
Updated to clarify that Reuters’ presence is stronger in Asia and Europe than it is in the US, according to the source.