December 1, 2011 marked the resignation of Thomas Glocer as CEO of Thomson Reuters. While I discussed the recent acquisitions by Bloomberg Law and their impact on the marketplace in my last three blogs, the fates of these two rivals are inextricably linked, so this is a tale of two companies.
Thomson Reuters is the product of the acquisition of the famous Reuters News Service by the Canadian Thomson family in 2007 in a $17.2 billion buyout. The Thomson side brought legal, financial, scientific, and health care resources to the new combination, with a good portion of the legal business coming from its previous acquisition of the West Publishing’s print and Westlaw database products. The Reuters side brought the giant news service and financial data to the table, fueling the expectation that this new combination would effectively rival, if not surpass, Bloomberg as a global financial information provider.
Despite the glowing forecast of 2007, Thomson Reuters has struggled with the financial downturn that hit the markets in 2008. Glocer is being replaced by James Smith, the chief operating officer. Glocer was CEO of Reuters at the time of the takeover and he continued to head the combined operation. Smith came from the controlling Thomson side, so there is obvious speculation that the Thomson family was displeased with Glocer’s attempts to turn around its Markets division, which competes directly with Bloomberg in the sale of financial data, news and analytical tools to those in the financial sector. Particularly disappointing was the rollout of the Eikon, Thomson Reuter’s challenge to the customized Bloomberg “ubiq” ubiquitous terminal. The Eikon roll out was so disastrous that Mr. Glocer took personal responsibility for the markets division, which is responsible for Eikon.
Meanwhile, as Thomson Reuters was struggling with the declining markets and the Eikon problems, Bloomberg was planning the roll out of its Bloomberg Law product. Among the decisions Bloomberg had to make was what type of platform to use. The easy choice would have been to use the existing Bloomberg customized terminals. However, Bloomberg had to be aware of Thomson Reuters’ problems with Eikon and the reduced demand for the expensive financial products with their customized terminals. These events, combined with its market research showing that the legal market would not return to the old and dark ubiq days, convinced Bloomberg to break with tradition and offer only a web-based platform on its new Bloomberg Law product in 2011.
Perhaps it’s time for Thomson Reuters to take their cue from Bloomberg and migrate from the costly dedicated terminal to a web platform in order to meet the changing needs of its customers. The legal market underwent tremendous changes in platforms between the 1980s and the 1990s, as user demands, technological advances, economic changes and ultimately the practice of law changed. Legal terminals morphed from huge dedicated stand -alone machines, to small customized boxes dubbed “ubiqs”, to multi-purpose personal computers. Lexis and Westlaw survived the loss of monthly revenue from equipment and created other revenue streams. Executive turnovers, reduced demand for some of its products, and mergers and changes in divisions have all befallen Thomson Reuters. Maybe this is the time to re-engineer the way its products and services are packaged, delivered, and priced to the financial market. Tune in for the next installment.