Whole Foods and the twilight of "Organic Blogging"

Whole Foods Markets, which generates roughly 10percent of its business in the DC area, has changed its business code of conducts. As of Nov. 6, Whole Foods senior officials can no longer post comments anonymously or otherwise about the business, competitors or vendors on forums, chat rooms or blogs not sponsored by the company.

The amendment is mainly motivated by FTC’s informal investigation on Internet postings by Whole Foods’ CEO John Mackey. Since 1999, he posts anonymous comments on Yahoo Finance forums, being his latest , negative criticism against competitor and acquisition target Wild Oats Markets.

Although blogs, forums, message boards and chat rooms will remain at the cutting edge of public opinion making in the 21st century, Whole Foods announcement ends an era of virtually no censorship that started in June, 2003 when the Ninth Circuit Court of Appeals granted libel protection to bloggers, webmasters and e-mail list editors.

Although financial blogs and forums gain notoriety and influence over traditional sources of financial information and analysis, corporations have to live in a post-Enron era governed by Sarbanes-Oxley, where analysts and conflicts of interest are closely monitored.

Any company that has benefited from hyped up profit projections or has sustained loses from unjustified rumors knows the immediate repercussions of public opinion on investor perceptions, not to mention stock prices. It was just a matter of time before corporate censorship reached blogs, chat rooms and forums where investors once freely challenged analysts.

John Mackey’s anonymous postings and Whole Foods' updated business conduct code have set an interesting precedent that enabled the first form of censorship in an environment perceived as the epitome of freedom of speech. A precedent soon to be followed by other corporations, but most importantly a precedent with great potential to extend beyond the business world.

We enter a new era of censorship, not driven by federal regulatory bodies, but by self governance of public institutions. Do online comments from lobby groups, should be governed by internal codes of ethics? Should NGOs refrain from blogging on websites related to their fundraising? Should federal employees refrain from participating in forums where their agencies are being questioned?

For now the story has a happy ending, in spite of the FTC’s efforts, Wild Oats Markets was successfully acquired and Whole Foods’ stock price rose to the occasion. John Mackey was forgiven by his board as he remains CEO and only Whole Foods quarter earnings report, out next week, could prevent shareholders from being as forgiving as its board.

Since we are not Whole Foods officials we can still blog, comment, and rant and rave freely about pretty much everything on the Internet, but from now on it wouldn't hurt to think once or twice about conflict of interests before hitting that “post comment” button.

Sources:

Reuters
Wall Street Journal
NY Times
Wired.com