When news of Bloomberg’s “snooping” scandal flashed up on screens across the City last May, Jim Smith must have rubbed his hands in glee.
Thomson Reuters’ chief executive knew he needed something spectacular to reboot his company’s flagging financial division. Surely a mishap by his closest competitor was just that.
Yet several months on, the gap between the two leading data providers in the financial services market has widened even further with the latest figures from analysis firm Burton-Taylor making unpleasant reading for Thomson Reuters. The failure of the Eikon trading product it launched back in 2010 to take on Bloomberg’s $20,000-a-year (£12,200) terminal leaves it fighting a battle some believe it has already lost.
The 2008 merger between Canada’s Thomson and Britain’s Reuters created the world’s largest provider of financial news and information and within two years the enlarged group unveiled Eikon at Grand Central Terminal in New York, which it hoped would be the must-have trading terminal across the world.
It was instead its smaller rival Bloomberg, which was founded by former New York Mayor Michael Bloomberg in 1982, that slowly began to corner the market despite the hefty annual costs of its terminals.
City traders liked Bloomberg’s instant messaging tools in particular and between 2008-2012 it increased its financial market revenues from $6.2bn to $7.9bn, while Thomson Reuters’s fell from $7.9bn to $7.5bn in a total market that is estimated to be worth $25bn.
Bloomberg has, of course, faced its own difficulties and was last year forced into making a series of embarrassing apologies when it admitted letting its reporters use confidential information as they worked on stories.
Banks including Goldman Sachs and JP Morgan raised concerns after it appeared reporters had used internal Bloomberg customer information. In at least one case, a journalist was said to have contacted Goldman and suggested a partner might have left because they hadn’t logged into their Bloomberg machine recently.
Even the Bank of England waded into the row, calling the scandal “reprehensible” and warning it would liaise with other central banks “on this matter”.
“Our reporters should not have access to any data considered proprietary. I am sorry that they did,” wrote its editor-in-chief Mr Winkler in a 600-word column, entitled “Holding Ourselves Accountable” at the time. “The error is inexcusable.”
Despite this, estimates from Burton-Taylor show that Bloomberg’s worldwide financial markets revenues actually grew from $7.9bn to $8.2bn last year while Thomson Reuters fell from $7.5bn to $7bn.
Douglas B Taylor, founder and managing partner at Burton-Taylor, said: “In a market that has shown only a 2.29 per cent compound annual growth over the last five-years, Bloomberg continues to outperform with 5.77 per cent revenue growth over the same period, supported by increases in their terminal population from 285,000 to nearly 319,000.” Even though Thomson Reuters’ overall revenues were significantly higher than its rival last year – at an estimated $13bn compared to Bloomberg’s estimated $8.3bn – the data shows that Bloomberg is winning the head-to-head battle.
Alex DeGroote, an analyst at Panmure Gordon, said: “Bloomberg has been taking market share for some time. It used to be a rarity in the City to see Bloomberg terminals but now they’re everywhere. The Reuters brand has been downgraded under Thomson while Bloomberg is on the up and up.”
The news is not all bleak for Thomson Reuters, which in October said that new sales of its financial terminals outpaced cancellations in the third quarter for the first time since 2011, raising hopes of a turnaround in fortunes.
However, with the “snooping” scandal failing to knock Bloomberg of its perch, it is going to clearly take something remarkable to boost Thomson Reuters’ flagging fortunes.
One area to watch may be non-financial market sectors which Bloomberg is expanding into to diversify its operations. This was demonstrated last week by the acquisition of the legal research firm BNA – although it still has some way to go to match Thomson Reuters outside of the financial markets.
To coin an old cliche, Bloomberg may have won the battle but the war is far from over.