Bloomberg investing in companies that it covers

Nicole Perlroth of The New York Times writes about how Bloomberg LP has invested in tech companies that its news operation writes about.

Perlroth reports, “It is not the first time that Bloomberg L.P. has put its money in technology companies. It is a limited partner in Andreessen Horowitz, a venture capital firm with investments in technology companies like Facebook and Twitter. And until shutting it down recently, Bloomberg also ran its own incubator, Bloomberg Ventures, which helped build new businesses that could later be folded into Bloomberg products.

“But Bloomberg Beta is the first time that Bloomberg L.P. will reap profits from direct investments in some of the technology companies that its news operation covers.

“It is already an awkward time for the company, which is under fire because its reporters used Bloomberg’s financial terminals to snoop on companies they covered, including Goldman Sachs, and the fund raises questions on journalism ethics.

“‘This puts Bloomberg News’s credibility at issue,’ said Edward Wasserman, dean of the Graduate School of Journalism at the University of California, Berkeley. ‘Reporters will not only be held to standards of accuracy and the like, but scrutinized for evidence of self-dealing and self-interest, which can be toxic to a news organization.’

“Bloomberg Beta’s partners say they will operate as a separate legal entity from their parent company, which is Bloomberg Beta’s sole investor. The firm will be based out of Bloomberg’s offices in San Francisco, where many of its technology reporters are also based.”

Read more here.