STREAMING NOW: Watch Now

Silicon Valley wrestles with Saudi Arabia ties

For years, Saudi Arabia has been one of the unofficial banks for the tech industry. Now it could become a ve...

Posted: Oct 13, 2018 6:07 AM
Updated: Oct 13, 2018 6:07 AM

For years, Saudi Arabia has been one of the unofficial banks for the tech industry. Now it could become a very official headache.

Uber CEO Dara Khosrowshahi and Virgin Galactic founder Richard Branson joined a growing list of business leaders distancing themselves from the Saudi government amid growing questions about the kingdom's role in the disappearance of journalist Jamal Khashoggi.

California

Continents and regions

Middle East

Middle East and North Africa

North America

Saudi Arabia

Silicon Valley

Southwestern United States

The Americas

United States

Banking, finance and investments

Business, economy and trade

Companies

Financial markets and investing

Uber

Business figures

Jamal Khashoggi

Misc people

Private equity

Richard Branson

SoftBank Group Corp

Technology

Virgin Galactic

Virgin Group Ltd

Funds and investment trusts

Government and public administration

Public finance

Sovereign wealth funds

Company activities and management

Company strategy

Startups

Both Uber and Virgin Galactic had previously turned to Saudi Arabia for vast investments that would once have been impossible on the private market. Uber received a staggering $3.5 billion in funding from Saudi Arabia's Public Investment Fund in 2016 and added the Public Investment Fund's managing director to its board, where he still serves today. The next year, Branson and Saudi officials announced the fund intended to invest $1 billion in Virgin's space companies.

At the time of the investments, both companies framed Saudi Arabia as becoming more reform-minded, both in terms of the economy and, in Branson's words, a "more progressive stance on areas such as women's rights."

That case is harder to make in the wake of Khashoggi's disappearance. Turkish authorities say they believe Khashoggi, a prominent journalist and critic of the Saudi regime, was killed at the consulate in Istanbul. The Saudis have denied the allegation.

On Thursday, Branson said his company will "suspend its discussions with the Public Investment Fund over the proposed investment" as investigations into Khashoggi's fate continue. Khosrowshahi, meanwhile, said he was "very troubled" by the news about Khashoggi and would be pulling out of an upcoming Saudi conference. He did not address his company's business relationship with the kingdom. A representative for Uber did not immediately respond to a request for comment.

The statements highlight the new challenge much of the tech industry may face in reconciling its financial ties to Saudi Arabia with renewed public scrutiny of the country's leadership. This year, the Public Investment Fund also reportedly took a $2 billion stake in Tesla and pumped nearly half a billion dollars into Magic Leap, a buzzy startup working on augmented reality products.

Representatives for Tesla and Magic Leap did not immediately respond to requests for comment.

Numerous other big-name startups have received funding from Saudi Arabia indirectly, through SoftBank's Vision Fund. The massive $93 billion technology investment fund launched last year with $45 billion of its backing from Saudi Arabia's sovereign wealth fund -- part of a broader effort to diversify the country's economy away from oil.

Almost overnight, the fund turned SoftBank and its CEO Masayoshi Son into the new kingmakers in Silicon Valley. The Vision Fund has pumped money into startups like WeWork, Slack, DoorDash and others. These cash infusions, often totaling hundreds of millions -- if not billions -- can supercharge businesses and significantly delay the need for startups to stage a public offering.

But Saudi Arabia is the clear kingmaker behind the kingmaker.

"We are the creators of SoftBank Vision Fund. We have 45 percent," Saudi Arabia's Crown Prince Mohammed bin Salman told Bloomberg in an interview last week. "Without the PIF [Public Investment Fund], there will be no SoftBank Vision Fund."

The country's very public involvement now runs the risk of unnerving these companies' employees and customers. WeWork declined to comment. Representatives for Slack, DoorDash and more than a dozen other startups backed by Vision Fund did not immediately respond to requests for comment on their ties to the fund. Representatives for SoftBank also did not immediately respond to request for comment.

In the same interview last week, the Crown Prince said he expected to invest another $45 billion into a new Vision Fund, paving the way for even greater influence in the tech industry.

Later that week, multiple publications, citing Turkish intelligence, began reporting that the missing Khashoggi was killed in the Saudi Arabian Consulate in Istanbul.

Mississippi Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 111322

Reported Deaths: 3202
CountyConfirmedDeaths
Hinds7751171
DeSoto663677
Harrison481181
Jackson431978
Rankin380886
Madison371792
Lee341379
Forrest295177
Jones283182
Washington251497
Lafayette241742
Lauderdale2344130
Lamar214938
Bolivar198075
Oktibbeha194654
Neshoba1806111
Lowndes173962
Panola165136
Leflore160086
Sunflower157449
Warren152154
Monroe144872
Pontotoc143519
Pike136455
Lincoln134854
Copiah134636
Marshall132626
Scott123229
Coahoma123136
Grenada120137
Simpson118148
Yazoo117233
Union113925
Holmes113260
Tate112739
Leake112239
Itawamba109024
Pearl River108256
Adams104342
Prentiss101619
Wayne98521
Alcorn95512
George93517
Marion93242
Covington91625
Tippah85120
Newton84227
Chickasaw82024
Tallahatchie81825
Winston81521
Tishomingo79040
Hancock76927
Attala76525
Clarke71448
Clay67221
Jasper66616
Walthall63327
Calhoun60912
Noxubee59516
Smith58116
Claiborne53216
Montgomery52723
Tunica51817
Lawrence49514
Yalobusha48414
Perry48022
Carroll46012
Greene45317
Stone45014
Amite41513
Quitman4136
Humphreys39916
Jefferson Davis39411
Webster36513
Wilkinson32920
Kemper31815
Benton3054
Sharkey27714
Jefferson26310
Franklin2303
Choctaw2036
Issaquena1063
Unassigned00

Alabama Coronavirus Cases

Confirmed Cases: 153016

Reported Deaths: 2633
CountyConfirmedDeaths
Jefferson22400372
Mobile14282314
Tuscaloosa9983132
Montgomery9691196
Madison899992
Shelby703560
Lee643966
Baldwin637567
Marshall426748
Calhoun410259
Etowah402049
Morgan394532
Houston363132
DeKalb316727
Elmore309552
St. Clair279742
Limestone269227
Walker268092
Talladega255034
Cullman225823
Lauderdale206340
Autauga199928
Franklin199131
Jackson199114
Colbert190627
Russell19023
Dallas185227
Blount183823
Chilton180531
Escambia170928
Covington164729
Coffee16409
Dale162551
Pike130212
Chambers127343
Tallapoosa127286
Clarke126716
Marion104229
Butler99840
Barbour9819
Marengo96721
Winston89913
Geneva8337
Pickens80317
Randolph79514
Lawrence79230
Bibb78913
Hale74529
Cherokee71514
Clay70712
Lowndes69927
Bullock63517
Henry6316
Monroe6279
Washington62112
Crenshaw59030
Perry5796
Wilcox55712
Conecuh55413
Fayette54712
Macon52919
Cleburne5247
Sumter46421
Lamar4575
Choctaw38612
Greene33316
Coosa1963
Out of AL00
Unassigned00
Tupelo
Clear
68° wxIcon
Hi: 85° Lo: 62°
Feels Like: 68°
Columbus
Clear
73° wxIcon
Hi: 84° Lo: 62°
Feels Like: 73°
Oxford
Clear
64° wxIcon
Hi: 82° Lo: 60°
Feels Like: 64°
Starkville
Clear
64° wxIcon
Hi: 83° Lo: 59°
Feels Like: 64°
WTVA Radar
WTVA Temperatures
WTVA Severe Weather