Aol: You've Got Conflicts (Updated)

In what seems like an obvious conflict of interest, Fortune reports that Mike Arrington, founder of Aol's TechCrunch, is launching a venture capital fund to invest in start-up companies. Aol's TechCrunch specializes in reporting on start ups.

Arrington is notorious for trading access for coverage and has previously been criticized for investing in the industry. It's no surprise that he doesn't view this as a problem. He plays by his own rules, and makes no bones about that. Good for Mike.

But this isn't just about Mike. Quite frankly, I'm surprised by Aol's involvement. Reports are that Aol is to be a cornerstone investor in Arrington's $20 million "CrunchFund." That's pretty shocking. It means that not only will Aol's TechCrunch be reporting on the companies it invests in (and their competitors) but that other Aol properties like the Huffington Post will have a financial incentive to give the fund's investments positive coverage.

I wonder how Mike's boss Arianna feels about all of this.

Update 2: Mike's boss Arianna Huffington announced that he is no longer an Aol employee. This appears to be a sudden break with what was reported yesterday. Even so, with Aol being a cornerstone investor in the $20 million CrunchFund that will finance companies covered by Aol TechCrunch and Aol Huffington Post, the move does little to ease conflict of interest concerns.

(Update 1: Aol's apparently looking to replace Mike Arrington. He'll still write for TechCrunch, but he "will no longer have editorial control or decision making.")

[Photo by Randy Stewart / blog.stewtopia.com]


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