John Battelle's Searchblog

InfoWorld also has an interview with Jen:

http://www.infoworld.com/article/05/02/16/HNgoogleblog_1.html

I still think everyone's missing the point. This has turned into a "bloggers vs. the corporation" issue ("We should be able to say what we want on our personal blogs") when, in my opinion, it's more of a legal issue (and damage control). Here's a comment I made on the blog you mentioned above in response to something the writer wrote:

"I disagree with the following:

'The sensitive material that Google management was referring to is not spectacular -- almost all of it can be found on public records (try here, for example). One sentence that was taken out read, “Both Google's profits and revenue are growing at an unprecedented rate.”'

"First of all, let's put this in a bit of context. There's more to the post than what you (and I) quoted above -- it might be worth it for folks to read the entire original post. GOOG has had problems with inappropriate financial disclosures in the past -- the Playboy interview just prior to the IPO is probably the most notable. In addition, many analysts did not expect that GOOG's profits would keep growing at an unprecedented rate. Quite the contrary: many were expecting things to cool off after the buzz from the IPO died down. Also, the information posted in Mr. Jen's blog was not available publicly at the time.

"Now consider that it is the week before you are to make your latest earnings announcement and one of your employees publicly posts on his blog that he had just attended an internal sales presentation where the latest financial results were discussed -- and the results are phenominal. While that may come across as vague to some (although, it seemed quite clear to me that things were great and getting better at GOOG), professional investors kill for that kind of infomation. And, no wonder: the next week when GOOG announced fantastic earnings (which, of course, anyone who read Mr. Jen's blog knew they were going to do) the stock jumped at the open by more than $21, and closed at a record high (at that time) for GOOG of $205.96.

"So, the information in question was not available publicly prior to the disclosure by Mr. Jen. And, clearly the way he characterized it made it material. There's a legal term for that: "material, non-public information." Most people call it "inside information," and the SEC has very strict regulations about what can and can't be publicly disclosed -- and, incidently, how to handle things when "material, non-public information" has been inadvertantly made public.

"I can imagine quite a few people at GOOG getting upset about that little post. That alone is probably enough to justify termination. Throw in all the other posts (that apparently made others unhappy) and it was probably inevitable.

"Just imagine if one of GOOG's senior executives had posted the same thing. We'd be reading about an SEC investigation of violations of Reg FD and class-action lawsuits."

Heck, the SEC has even investigated possible Reg FD violations because company spokesmen looked depressed when they spoke publicly. I kid you not.

We certainly would not be reading about how unfair it is that the executive can't talk about whatever he wants to in his personal blog. And we certainly would not be reading that "he got fired for blogging."

I understand regulators in securities exchanges only track *priviledged* information leaks. In this case, the information was broadcasted. Your point is a non-issue.

Denis, what information are you referring to that was "broadcasted?" The Google Global Sales Conference that Jen blogged about on Jan. 18th was broadcasted publicly? That's news to me. I was under the impression that it was an internal sales meeting...a *secret* internal sales meeting:

"As this is being writtten, about 1800 Google marketing people from its offices around the world are at an internal sales conference at a secret location in San Francisco, being briefed on a completely revamped Google Adwords/Adsense program and other new features."

Source: Silicon Valley Watcher, Jan. 20, 2005

More than 20 analysts cover GOOG and I could find no indication that any of them knew this information before GOOG announced it Feb. 1.

As I said before, the information Jen blogged about was "non-public" when he blogged about it. Hardly a non-issue.

Or did I overlook an announcement somewhere?

Oops, actually, the post where Jen made the financial "disclosure" was on Jan. 21, not Jan. 18.

For those who missed the offending post the first time, here is the juicy stuff:

"they started off the day with a financials presentation, which was actually quite nteresting. of course, i understand that they obviously will put a positive spin on everything, but the weight of the raw numbers is undeniable. both google's profits and revenue are growing at an unprecedented rate even while they are increasing their expenditures on capital and human
resources. not to mention that google has been
primarily focused on the u.s. market and is now turning their full attention to the global marketplace."

For someone interested in GOOG stock, information like that from the "inside" is golden. I did some more checking and I haven't been able to find any indication that this was broadcast publicly by GOOG prior to Feb. 1. If it was broadcast prior to the official earnings announcement, it looks like GOOG forgot to invite their investors. According to Reg FD, which changed the concept of "privileged" significantly, that's a no-no. Reg FD also requires "full disclosure" within 24 hours of any inadvertant disclosures of material, non-public information. I couldn't find any indication of that, either.

A company that wants to embrace the 21st century should hire Mark Jen to do what he does best: chronicle life inside that company.

Probably a tech company would be bad, since tech companies seem so hypersensitive about leaking details of their corporate cultures. (Gee, Google offers all the free Cocoa Puffs all the employees there want to eat... shocking! :)

Instead, Mark should work for an "old school" company wanting to revamp its image to show how hip and embracing-the-web it can be. A company like General Motors, for example:

http://www.gmblogs.com/

I believe that GM would get a ton of buzz (and goodwill) if they hired Mark and just said, "Spend all your time walking around the company, visiting different sites, telling the world what you see."

This could bring a hipness to their brand(s)-- especially the younger ones they'd like to segment -- by allowing Mark to do what he does and talk about people and processes and the good, the bad, and the ugly of what he's seen, all in the public view.

Or better yet, you know who should hire Mark Jen? A standards organization that's responsible for many of the web's standards but still doesn't have a blog, as for as I know: The World Wide Web Consortium.

http://www.w3.org/

How cool would it be if he would attend all the meetings and report on what happened there to those of us who aren't "members" but nonetheless have to live with the technologies W3C recommends. (Earth to W3C: It's 2005. Get a blog. Even GM has two blogs, can't you get one???)

Scott: I'm sure you did not overlook any announcement and that you've all the dates correct and all.

My point here is you are raising a non-issue. You can argue that it was not the guy's job to reveal confidential information. But you cannot argue that what he did something is shady from the SEC's perspective. Whoever went on his weblog could get the information he revealed on his blog. This is very different from revealing confidential information to a select few.

Let me whack this dead horse a bit more, Denis. Two thoughts come to mind:

1. I seem to recall reading somewhere on Mr. Jen's blog that he thought his blog was only being read by a few friends and family.

With that in mind, this might be problematic:

"13. Can an issuer disclose material nonpublic information to its employees (who may also be shareholders) without making public disclosure of the information?

Yes. Rule 100(b)(1) states that Regulation FD applies to disclosures made to "any person outside the issuer." Regulation FD does not apply to communications of confidential information to employees of the issuer. An issuer's officers, directors, and other employees are subject to duties of trust and confidence and face insider trading liability if they trade or tip."

http://www.sec.gov/interps/telephone/phonesupplement4.htm

So, the company can give out confidential information to it's employees without having to disclose the information publicly, but then the employees have an obligation not to turn around and trade on that information or disclose it to anyone outside the company.

2. I suspect we'd have a hard time convincing the SEC that a low- or mid-level employee's personal blog is an acceptable forum for releasing material information.

So:

"Under Rule 100(a)(2), when an issuer makes a covered non-intentional disclosure of material nonpublic information, it is required to make public disclosure promptly. As proposed, Rule 101(d) defined "promptly" to mean "as soon as reasonably practicable" (but no later than 24 hours) after a senior official of the issuer learns of the disclosure and knows (or is reckless in not knowing) that the information disclosed was both material and non-public. "Senior official" was defined in the proposal as any executive officer of the issuer, any director of the issuer, any investor relations officer or public relations officer, or any employee possessing equivalent functions."

According to Bill Sherman, securities partner at Morrison & Foerster. "...Reg FD provides that if you innocently or naively transmit any material information selectively, you have until the next-trading-day grace period to get that information to the market."

Google's response was to have Mr. Jen remove the offending information from his blog. I suppose they could always argue that they didn't think the information was material.

We could all argue till the cows come home whether Jen's firing was a reasonable decision ("evil" or not). To me the more interesting/consequential question is whether Google removed Jen's blog entry from their cache. Has anyone asked Jen directly about that? Has that question been satisfactorily answered?