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TechCrunch Fails to Disclose Conflict of Interest in Kindle Story

For quite a long time, TechCrunch has been accused of conflicts of interest of various sorts. But a post today on whether a big screen Kindle could aid the newspaper industry fails to note that the company is funding a mobile computing device that could be a competitor, raising the question of whether there are entire categories of technology or devices that the site should avoid covering.

It's not as though companies are unknown for creating their own publications or commissioning them. But such custom publishing ventures generally avoid anything that would smack of writing about competitors.

The problem with TechCrunch's involvement in the new "CrunchPad" is that the device focuses on some broad areas of technology, as explained by TechCrunch founder Michael Arrington:

The key uses: Internet consumption. The virtual keyboard will make data entry a pain other than for entering credentials, quick searches and maybe light emails. This machine isn't for data entry. But it is for reading emails and the news, watching videos on Hulu, YouTube, etc., listening to streaming music on MySpace Music and imeem, and doing video chat via tokbox. The hardware would consist of netbook appropriate chipsets (Intel Atom or Via Nano), at least a 12 inch screen, a camera for photos and video, speakers and a microphone. Add a single USB port, power in and sound out, and you're done. If you want more features, this ain't for you.
That could easily compete with at least some of the news reading functions of a big screen Kindle, and could also compete with any netbook, which puts TechCrunch in direct competition with many companies that it covers, particularly in its CrunchGear blog, which covers "gadgets, gear and computer hardware."

Charges that TechCrunch has conflicts of interest are nothing new. The more outrageous ones, that the company would essentially sell endorsements, always failed for lack of any evidence, according to a former Valleywag writer, who wrote that Arrington "attracts haters at a level far beyond what you'd expect for what is basically an online trade magazine."

A more substantiated criticism is that Arrington has invested in companies that TechCrunch covers. Arrington essentially acknowledged that in a March 13, 2009 post in which he calls "false" all claims that the company had ever been "dishonest in our coverage":

Back to transparency, one change I'm going to make at TechCrunch is to get rid of all of our investment conflicts. I've long been an angel investor and have continued to make a very few investments even after starting TechCrunch. These investments are always disclosed and in my opinion we do more than enough to maintain transparency there. But it's also a weak point that competitors and disgruntled entrepreneurs use to attack our credibility. So over the next few months I'm going to divest myself of all of those investments in an orderly fashion, and I'll update readers on the progress. I'll also discontinue making any further investments.
But the CrunchPad would seem to fly in the face of the spirit, if not the letter, of that statement. Although Arrington has often said that disclosure alone is the cure for conflict of interest, it cannot be for a few reasons:
  • If you have invested in a company, it can turn you into a loyalist who may not be able to clearly see what is going on.
  • If a competitor comes along, the temptation to side with your investment would be great.
  • If you aren't disclosing each and every time that you cover a company that either you're invested in it or its competitor, then you aren't fully disclosing, because you can't expect people to have read, let along remember, everything else you've written.
  • Even if you manage to be absolutely fair in your coverage, you create the impression that you are not.
That last reason is the big credibility killer, with suspicion becoming the murder weapon.
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