BrokerDealers Instant Message Battle v. Bloomberg Chapter 2: Perhaps Perzo

As an instant update to the July 31 blog post profiling Blabber, the instant message (aka IM) application created by Goldman Sachs as a possible industry replacement for the ubiquitous Bloomberg LP chat service that connects Wall Street traders and salesman to their respective buyside customers, we thank Silicon Valley Business Journal contributor Jason McCormick for his coverage below.

perzo imPerzo Inc., an instant-messaging service based in Palo Alto, is in negotiations for a possible sale to a group led by Goldman Sachs Group Inc., according to the Wall Street Journal.

The group of financial firms, including JPMorgan Chase & Co. and Bank of America Corp., is seeking an alternative to Bloomberg LP’s messaging service, which has become a dominant way for Wall Street traders to communicate.

The Journal reported that the group is mulling an investment between $40 and $50 million in the company, created by communications executive David Gurle. The company already has financial backing from Merus Capital, which was founded by former Google Inc. executive Sean Dempsey.

The talks come following a push by Goldman to ban its traders from using some instant-messaging services offered by Bloomberg and others, according to The Wall Street Journal.

Bloomberg is facing pressure after reports surfaced that journalists in its employ used the service to check on the activities of its users.

Top BrokerDealer’s Babble Takes on Bloomberg Chat

babbleGoldman Sachs, the brokerdealer world’s most iconic investment bank is developing its own instant messaging service that could be used as an alternative to Instant Bloomberg, the chat tool contained in Bloomberg terminals. The project, nicknamed “Babble,” appears the brainchild of Goldman Sachs but won’t be exclusive to just one bank, according to CNBC. Rivals including J.P. Morgan are also said to be involved.

Banks have plenty of reason to run their own instant messaging services. First, there is the relationship with Bloomberg, which was forced to apologize after granting reporters access to client information stored in Bloomberg terminals. But CNBC says that the main reason for the move isn’t a lack of trust between the two firms or any particular security concerns. Rather, it’s a money and an integration issue. Bloomberg terminal leases cost upwards of $20,000. Plus, Babble is being designed so that it can be integrated with other tools that banks and clients can share, according to the report.

“It will be interesting to see how much a fully-functioning chat alternative would affect Bloomberg. As of last year, Bloomberg’s flagship terminal business accounted for 85% of the company’s revenue, though the firm is actively trying to diversify its business. Still, chat functionality isn’t the only use for the terminals, obviously. Wall Street has been trying to wean themselves off Bloomberg terminals for a while now. Would a chat replacement really be a deathblow? Unlikely. But who knows – maybe it will give banks a bit more leverage in negotiations.”