By Andrew Ross Sorkin
As camera lights flashed, President-elect Donald Trump strode across the lobby of Trump Tower with Masayoshi Son, the colorful Japanese entrepreneur, in December.
“This is Masa of SoftBank from Japan,” Trump said before boasting that Son’s SoftBank—which is in the process of amassing a giant $100-billion fund—had pledged to invest $50 billion in the United States and would create 50,000 jobs here.
“He’s one of the great men of industry, so I just want to thank you very much,” he told Son, who was an early investor in Yahoo and Alibaba.
Just last month he bought the Wall Street firm Fortress Investment Group for $3 billion.
The photo op was intended to be part of Trump’s “America First” campaign.
Yet unmentioned that day—and largely unremarked upon—is that Son’s $100-billion SoftBank Vision Fund could reasonably be described as a front for Saudi Arabia and perhaps other countries in the Middle East.
Saudi Arabia is the majority investor in the fund, with some $45 billion pledged. A state-owned investment company from Abu Dhabi, Mubadala Development, is in negotiations to invest $15 billion as well. Qatar is also in talks to invest in the fund.
This is not a secret to anyone who has been paying even a modicum of attention to the news that has dribbled out about the fund.
While Son has pledged to provide a quarter of the fund himself, hardly any of the money comes from investors in the United States—with the exception of several nominal $1-billion investments, including from Apple, Qualcomm and Larry Ellison of Oracle.
Trump’s embrace of Son, and therefore Saudi Arabia, to take over some of Silicon Valley’s most promising companies and intellectual property could be seen as being at odds with his nationalistic talk.
“Would you take money from the Saudis?” Sean Hannity of Fox News asked him last year.
“No,” Trump replied, without missing a beat.
On the campaign trail, Trump criticized Hillary Clinton’s ties to Riyadh.
“Crooked Hillary says we must call on Saudi Arabia and other countries to stop funding hate,” Trump wrote on Facebook. “I am calling on her to immediately return the $25 million plus she got from them for the Clinton Foundation!”
Those references were made in the context of politics, but should they also extend to business?
This column isn’t taking a position on the politics or the morality of taking money from Saudi Arabia. But it is a conversation that is worth having.
Just as the United States has tried to become energy independent from the Middle East for economic and political reasons, we may be on the verge of taking the opposite tack when it comes to our innovative startups.
While Trump wants to stimulate foreign investment in the United States, he has also talked tough about the Middle East and terrorism. Fifteen of the 19 hijackers involved in the September 11, 2001, attacks were citizens of Saudi Arabia.
In true Trumpian style, he has made somewhat contradictory statements about Saudi Arabia: “Saudi Arabia—and I get along great with all of them. They buy apartments from me,” Trump said at a campaign stop. “They spend $40 million, $50 million. Am I supposed to dislike them? I like them very much.”
Saudi Arabia’s laws are antithetical to many Americans and even to Trump’s most conservative views: Women are not allowed to drive, homosexuality is punishable by stoning to death and freedom of religion is not permitted.
Which makes it all the more surprising that when Prince Mohammed bin Salman, Saudi Arabia’s deputy crown prince, came to California last year, a who’s who of technology and venture capital chief executives lined up to meet with him. The tour included meetings with Tim Cook of Apple, Mark Zuckerberg of Facebook, Satya Nadella of Microsoft, and venture capital investors like Marc Andreessen, Reid Hoffman and Peter Thiel.
Or maybe it is not surprising if you take the view that an influx of cash from Saudi Arabia will most likely lift the valuations of all Silicon Valley companies. Cash is cash.
Last year, however, when Saudi Arabia invested $3.5 billion in Uber, it kicked up some dust: Fortune magazine said the deal “poses a sort of moral dilemma for Silicon Valley; forcing businesses to weigh investors’ record and financial firepower against their principles.”
Saudi Arabia has been transparent about its plans to diversify its economy away from its dependence on oil. Part of its plan is to buy assets in other countries, like US technology companies. Prince Mohammed is also in favor of loosening some of the social strictures that trouble women and others. And some foreign-policy experts suggest that closer ties like these investments may help prompt quicker reform in Saudi Arabia.
In fairness to Trump, if he does want to bring huge investment sums to the United States, it is hard do that without involving some countries with which we have had complicated relationships. Some of the largest money is tied up in vast sovereign wealth funds.
Not all of the $50-billion investment that Son pledged to make here is likely to come from SoftBank’s Vision Fund, the one backed by Saudi Arabia. Some of it may come directly from SoftBank, which owns Sprint and is hoping to merge it with T-Mobile.
All that said, can you imagine if Trump stood in the lobby of Trump Tower with Prince Mohammed talking about a $50-billion investment in the United States from Saudi Arabia?
It’s hard to see—but then again, stranger things have happened.
© 2017 The New York Times
Image credits: Timothy A. Clary/Agence France-Presse/Getty Images