Michael Arrington is back behind the wheel

Michael Arrington appears to be pulling the strings at TechCrunch again. But now that he is an investor, is it appropriate for the blog’s founder to be silently passing scoops to an influential news source?

In recent weeks I’ve been wondering whether TechCrunch might be getting its mojo back: it’s breaking news again like it used to, and some of its senior writers seem to be back on their game. On closer inspection, however, it looks like something more sinister may be going on.

Michael Arrington was recently fired from the board of PandoDaily after his provocative “I’m Back” post which appeared to be a way of thumbing his nose at departing editor Erick Schonfeld. Arrington’s commitment to appear on stage as a host at TechCrunch Disrupt in New York this weekend appears to represent a clear breach of his fiduciary duty to PandoDaily. It’s no wonder Sarah Lacy got mad.

But it was just the first of many public indications that Arrington’s influence on TechCrunch is silently growing again. According to Kernel sources, that “I’m Back” headline is, if Arrington has his way, to prove truer than anyone has yet imagined.

Insiders tell us that now Arianna Huffington’s brief at AOL has been cut back to size - she no longer has responsibility for any of AOL’s technology properties – Arrington has scented the opportunity to retake editorial control of TechCrunch. This would be merely entertaining to watch were it not for the fact that Arrington is now a venture capitalist.

It is alleged by multiple sources that Arrington has been seeding stories to TechCrunch about his own investments, repaying Alexia Tsotsis and Eric Eldon, the present co-editors, for this malpractice by passing them scoops about non-Crunchfund companies they might not otherwise have been able to obtain.

When one hears allegations such as these repeated and then confirmed by people close to the company, it is difficult to resist drawing the same conclusions as Dan Lyons about Arrington’s approach to journalism. Take, for example, a post on Arrington’s personal blog, Uncrunched, about a company he has invested in: Skybox.

In the post, Arrington hints at information he, as an investor, has access to that the company itself cannot share due to confidentiality agreements – which he then publishes. The pretext for the post, Arrington says, is news which had “broke[n] yesterday”. Two sources have told us that Arrington himself provided TechCrunch with the story in the first place.

Then there is Churchkey, reported on at gushing length by TechCrunch co-editor Eric Eldon, who notes: “There’s been surprisingly little press for Churchkey to date (which is what the company apparently wants).” Eldon mentions Arrington’s CrunchFund as an investor – but not that Arrington passed TechCrunch this story too, which is what two people have told us.

Eldon’s coverage was dutifully followed by a post on Uncrunched, which failed to disclose Arrington’s involvement in breaking the news in the first place. Nor do either Arrington or Eldon explain why this publicity-shy company is suddenly now appearing on stage at TechCrunch Disrupt – the conference that got Arrington booted off the PandoDaily board.

There’s more. Questions are also now being asked about the other big scoops TechCrunch has landed recently: the ins and outs of Facebook’s IPO, as well as two recent high-profile funding rounds. Did TechCrunch, which has lost every one of its most talented newshounds and which had, until very recently, been struggling to break news, suddenly start getting the inside scoop again? How? Why?

Or is it, as our sources suggest, that there is an advisor and potential investor in Silicon Valley obtaining confidential information about start-ups as part of the normally confidential pitching process and passing the juiciest morsels directly over to his outlet of choice? If so, it represents a grave breach of trust and ethics from the investor and a horribly short-sighted strategy by TechCrunch’s editors.

There is no love lost between TechCrunch and PandoDaily. The Kernel hears regular missives from both sides of the debate that set out in detail how hopelessly editorially compromised the other party is. Certainly, it is true that PandoDaily’s funding model leaves a bitter taste in many readers’ mouths, but, of all the site’s problems, it is perhaps not the largest: after all, so far it has been pretty good at disclosing conflicts where they exist.

The passage of staff between TechCrunch and PandoDaily has also been well documented. (What is less well known is just how much resentment appears to be bubbling away in the background, with rumours of offers and fake counteroffers reported to superiors in bids to drive up salaries. We won’t bore you with the details.)

But absent the voluminous disclaimers which, quite rightly, appear on PandoDaily, it does not seem appropriate for a venture capitalist to wield this much control over a powerful news source. Michael Arrington is keeping a relatively low profile these days, although – as one of our sources pointed out – he did recently find the time to deliver a stern telling-off to VentureBeat about, of all things, their disclosure policy.

It is understandable that Arrington might wish to regain control of TechCrunch, which was his creation, particularly after the unfortunate manner in which he was ejected from the company. But there can be no space for him as a power behind the throne, invisible and unaccountable, when TechCrunch is still the largest and most influential tech blog in the world, particularly now he is investing in, and privy to confidential information about, fragile young technology companies.

TechCrunch’s desire to maintain its position on the Techmeme leaderboard is equally understandable. But rather than grubby tactics such as rolling up TechCrunch Europe and the various other geographic properties into techcrunch.com to aggregate headline space and taking scoops from people who ought not to be breaking confidences, perhaps the editors ought to try their hand at some good, old-fashioned journalism.

Arrington had not immediately returned a request for comment at the time of going to press. But given the rumours flying around Silicon Valley, and a much shorter tolerance for this sort of thing from readers these days, there are questions to be answered here. The Kernel isn’t taking sides. But people are starting to talk: during our video chat yesterday, former TechCrunch reporter Paul Carr remarked that “certain reporters who haven’t broken a plate, let alone a story, now seem to be Woodward and fucking Bernstein”.

It appears to me that soon, unless the situation is remedied, all this will be out in the open, chewed over by the likes of Kara Swisher and Dan Lyons. I can’t imagine that’s a prospect anyone involved will relish.