WHEN Google Inc. (NASDAQ: GOOG) CEO Eric Schmidt announced that he was stepping aside from the top management job at the company, he did so in a way that provides a blueprint for the use of social media in official public company disclosures.
Instead of the traditional approach of announcing the move in a news release distributed by paid PR wire services, Schmidt made the announcement on Google’s official corporate blog, and then followed that with a message on his personal Twitter account.
So how is that legal? Well, to stay onside with the US Securities and Exchange Commission’s Regulation FD requirements, the company carefully synchronized Schmidt’s blog post with the filing of the same post on a Form 8-K in the SEC’s EDGAR filings database. The post on Google’s blog and the SEC filing occurred within 6 seconds of one another.
Google probably filed the blog post on EDGAR because it has never formally adopted its corporate blog as an official channel for the company’s disclosures to the financial markets. But by filing the post on EDGAR rather than using a PR wire to make the announcement, the company fully complied with its reporting obligations.
It’s worth noting that Google does use its official investor relations website as its primary channel for disclosing its earnings to the market and no longer uses a PR wire service to do so. It was the first to make the move, and has now been followed by Microsoft. Recently, Netflix (NASDAQ:NFLX) announced that it’s going to do the same thing.
In fact, a growing number of companies are changing how they disseminate their financial disclosure information. They are either bypassing the PR wires by using their own websites and associated push technologies along with SEC filings, or they are using the PR wires merely to distribute short advisory releases that link back to the full-text information on their corporate websites.
Trouble in PR wire land
All of this spells trouble for the big PR wire services like Business Wire and PR Newswire. They have long enjoyed a free ride on a disclosure gravy train courtesy of SEC and stock exchange rules, but now see that ride coming to an end, especially as companies begin to see that PR wire distribution isn’t all it’s cracked up to be, as Apple’s recent incident demonstrates.
As things stand, the SEC, the New York Stock Exchange and NASDAQ now all recognize that information posted on companies’ websites or blogs can be Reg FD-compliant if they meet certain standards and can show that investors are using them.
In an increasingly vain bid to protect their franchises, the bigger PR wire services have been on an offensive to discredit web disclosure and create fear, uncertainty and doubt among their compliance-minded clients.
Business Wire’s blog is full of attack posts going back to 2007, when Sun Microsystems first asked the SEC to reconsider its views on using websites and blogs to meet Reg FD’s dissemination requirements.
But as Schmidt’s announcement via blog post, tweet and SEC filing shows, the tide is now clearly moving against the old and companies are confidently embracing the new.
P.S. If you’re wondering about Schmidt’s reference to “adult supervision” in his tweet, Scott Austin at the Wall Street Journal’s Venture Capital Dispatch explains the context.