TechCrunch's Founder Has Been Ejected

After a protracted back and forth over his fate, editor Mike Arrington is truly finished at TechCrunch, the influential website he started in 2005 and sold to AOL almost exactly one year ago. AOL says Arrington "decided to move on" to running his venture capital fund, relinquishing any role at TechCrunch or AOL.

AOL issued a statement saying it will continue to invest in Arrington's investment vehicle, CrunchFund. "Arrington, the founder of TechCrunch has decided to move on from TechCrunch and AOL to his newly formed venture fund," the statement read. "TechCrunch will be expanding its editorial leadership in the coming months." The translation from AOL corporatese almost goes without saying: Arrington has been fired, essentially, though he may have signed on the dotted line to recoup some of his earn out bonus from the sale to AOL.

Chalk this up as a victory for AOL overlord Arianna Huffington, whose deft political and media relations skills helped her win an internal power struggle against fellow blogging pioneer Arrington. (Arrington found himself in the middle of a debate over journalism ethics when he recently announced the creation of his own venture fund.) As AOL's editorial director, Huffington is now in a position to stock Arrington's former site with people of her own choosing.

Arrington's departure could also be a big step forward for nominal TechCrunch editor Erick Schonfeld, who was named as Arrington's successor in AOL's statement. He'll have to maneuver around Arianna, but Schonfeld is no babe in the woods: The New York based editor is rumored to have made a savvy grab for equity when he joined TechCrunch in 2007; we heard he ended up with 5 percent of the company, a staggering figure for a non-founder. A stake like that would have made the longtime business journalist a millionaire after TechCrunch sold for a reported $25 million - $40 million — one of a select few journalists to have become rich (arguably rich, at least) within his chosen profession . We could never get Schonfeld or Arrington to comment on Schonfeld's purported wealth when we asked around last fall. In any case, he's been politic enough to recently pour cold water on Arrington's assertion, just before his departure, that "we no longer have editorial independence." (Disclosure: I worked at Business 2.0 magazine for nine months when Schonfeld was there; it's possible we even spoke once or twice.)

In the end, though, this is a black eye for everyone at AOL, Schonfeld and Huffington included, no matter how you look at it. Even if you believe CrunchFund was a watershed conflict of interest for Arrington — a fairly ludicrous notion, given his history of similar activity, and given the other conflicts rife among AOL journalists — it is beyond bizarre for AOL to throw Arrington overboard after its executives approved his general investment plans in April (when they were widely publicized), approved the specifics again this summer (up to and including CEO Tim Armstrong and Huffington), and went so far as to invest $10 million in AOL money into the venture before it launched. Armstrong's word is pretty close to worthless at this point.

(On the bright side, at least everyone can stop talking about TechCrunch for a while. Please?)

Update: At today's TechCrunch Disrupt conference in New York, Arrington praised his team, parroted some corporate platitudes about how he'll continue to support TechCrunch — and showed off an "unpaid blogger" T-shirt that poked fun at Arianna Huffington. Video.

[More at TechMeme]

[Pic: Arrington today at TechCrunch Disrupt, via Kevin Krejci/Flickr]