DealBook: Jeff Bezos’s Lesson: Beware WhatsApp Accounts Tied to M.B.S.

DealBook: Jeff Bezos’s Lesson: Beware WhatsApp Accounts Tied to M.B.S.


Good morning from Davos, Switzerland, where President Trump spent yesterday and today schmoozing with corporate leaders. More below. Today’s tidbit: Guess who’s in Davos? Wesley Snipes. (Was this email forwarded to you? Sign up here.)

The late-night talk at Davos yesterday was dominated by the explosive revelation that the Amazon chief’s phone might have been hacked using a WhatsApp account tied to Saudi Arabia’s de facto ruler, Prince Mohammed bin Salman.

People pulled out their phones at Anthony Scaramucci’s wine-tasting event — a staple of the Davos party circuit — to read The Guardian’s report that Mr. Bezos’s device had probably been compromised in 2018 after receiving malware from a WhatsApp account linked to Prince Mohammed.

Mr. Bezos’s phone had begun sendingunusually large volumes of data,” the NYT reports, citing a person familiar with the inquiry. Investigators hired by Mr. Bezos believed Prince Mohammed was used as a conduit “because the message would not raise suspicions if it came from him.”

Consultants for Mr. Bezos have accused the Saudis of hacking the billionaire’s phone, possibly leading to the seizure of compromising photographs and text messages that later appeared in The National Enquirer.

The Saudi Embassy to the U.S. called the accusations “absurd on Twitter last night. U.N. investigators were set to release a statement this morning “addressing serious allegations” about the hacking.

What’s probably on other corporate leaders’ minds: Are they compromised, too? Business Insider notes the long list of people Prince Mohammed met during his 2018 tour of the U.S., including Tim Cook of Apple, Mike Bloomberg and Rupert Murdoch. (There’s no indication that they’ve been hacked.)

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Today’s DealBook Briefing was written by Andrew Ross Sorkin in Davos and Michael J. de la Merced in London.

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President Trump was a big draw at the World Economic Forum in Switzerland yesterday, and he used the opportunity to glad-hand with corporate chieftains, report Annie Karni, David Gelles and Peter Baker of the NYT.

• He chatted with C.E.O.s like Brian Moynihan of Bank of America, Sundar Pichai of Alphabet and Marc Benioff of Salesforce, congratulating them on their companies’ stock prices.

• “After his speech, he met with the International Business Council, and personally greeted every chief executive, according to attendees. The meeting was less about substance than socializing, one attendee said, as Mr. Trump grilled corporate leaders about whether they liked his speech.”

• What didn’t come up: the impeachment trial that started in earnest in the Senate yesterday.

• One bit of gossip: Mr. Trump had breakfast this morning with Tim Cook of Apple and other corporate leaders.

Greta Thunberg rebuked Mr. Trump, albeit indirectly, in a speech that followed his yesterday. She dismissed critics of her climate-change activism, including those who say, “Don’t be so pessimistic” — a reference to a line in Mr. Trump’s address.

The Davos roundup:

• The Swiss police said they had detained two Russians in August on suspicions that the men, posing as plumbers, were spies trying to plant surveillance equipment.

• An official at the gathering urged The Economist to drop Philip Morris International as the sponsor for one of its events there, saying that “nicotine-peddling death cults” skulked around the edges of the event in search of “reputation laundering opportunities.”

France may have reached a truce with the U.S. over a proposal to tax American internet companies, but other European countries haven’t, and that could lead to more trans-Atlantic trade battles.

Paris officials suspended their plans for a digital tax on the likes of Amazon and Facebook. In return, Washington postponed retaliatory tariffs on a range of French goods, including luxury items, in what some had taken to calling the “handbag war.”

But France is not the only European country unhappy with American tech giants’ avoiding taxes on local operations by shifting profits. Britain and Italy appear to be moving ahead with their own digital tariffs, and London plans to introduce one in April. (It’s expected to raise about 500 million pounds, or about $650 million, a year.)

Treasury Secretary Steven Mnuchin warned London and Rome that they would “find themselves faced with President Trump’s tariffs” if they moved ahead, the WSJ reports.

Boeing said yesterday that it did not expect regulatory approval for the troubled plane until at least June or July, Natalie Kitroeff of the NYT reports. That’s further acknowledgment from the plane maker that its troubles are far from over.

The announcement came after the discovery of more potential problems with the 737 Max, including with wiring, on top of the problematic software suspected to have played a role in two deadly crashes.

But Boeing is being conservative here, Ms. Kitroeff writes, citing three people familiar with the matter, to placate airline customers who have been annoyed with previous missed deadlines. If the F.A.A. finds no more problems with the 737 Max, the plane could technically start flying again in the spring.

What needs to happen next for that to materialize:

• Flight simulator tests by international regulators.

• A certification test flight with the F.A.A., which could happen by the end of February.

• More flight simulator training, even after regulatory approval.

SmileDirectClub has gained prominence for its direct-to-consumer teeth-straightening kits, riding its popularity to a $1.3 billion I.P.O. last year. But the company maintains its sterling reputation with hardball legal tactics, Erin Griffith and Peter Eavis of the NYT report.

• When some customers requested refunds because the company’s devices didn’t work, SmileDirectClub asked them to sign confidentiality agreements.

• “The agreement prohibited the customers from telling anyone about the refund and required them to delete negative social media comments and reviews,” Ms. Griffith and Mr. Eavis report.

• “SmileDirectClub’s actions underline the risks of ordering products from young companies that are bringing start-up-style ‘disruption’ to health,” the reporters note.

Jeff Ubben, the founder of ValueAct Capital, is stepping down as the company’s C.E.O., Lindsay Fortado of the FT reports. It’s a changing of the guard at one of the biggest activist hedge funds around.

Mr. Ubben will hand off to his longtime protégé, Mason Morfit. He already gave Mr. Morfit the title of chief investment officer nearly three years ago.

The departing C.E.O. will still oversee the ValueAct Spring Fund, a roughly $1 billion fund that promotes social change.

Mr. Ubben is regarded as one of the most influential activist investors, having taken aim at Citigroup, Microsoft and others. The bankers and lawyers who defend boardrooms against activists have also praised him over the years, telling Michael that they respected his more constructive, less shouty approach.

Deals

• Xerox is reportedly considering nominating up to 11 candidates for HP’s 12-member board, in what would be a sharp escalation of its hostile takeover bid. (WSJ)

• A C.E.O. of the European tech giant SAP said companies could face more activism from employees and consumers. (Bloomberg)

• The venture capital firm Lux Capital is fighting a court battle against early investors over a deal in which they sold back their stakes in the company. (FT)

Politics and policy

• The Supreme Court denied requests by Democratic lawmakers to speed up the appeals process for challenges to the Affordable Care Act. (WSJ)

• President Trump said he planned to expand his travel ban to include countries such as Nigeria and Belarus. (NYT)

• Meet Representative David Cicilline, the House Democrat taking on tech giants like Facebook and Google. (Politico)

Tech

• Britain unveiled tougher regulations for children’s online privacy, overriding objections from internet giants. (NYT)

• Netflix’s subscriber increases in the U.S. fell below expectations in the fourth quarter, but international growth exceeded them. (NYT)

• The British food delivery service Deliveroo is in limbo as a $575 million investment from Amazon remains under regulatory scrutiny. (FT)

• Officials in Suzhou, China, used facial recognition software to shame people who wore pajamas in public. (NYT)

Best of the rest

• The U.S. reported its first case of the coronavirus that has swept through China and other Asian countries. (NYT)

• German prosecutors are investigating Mitsubishi over accusations of cheating on emissions tests. (NYT)

• How the chicken producer Tyson is fighting back against the rise of plant-based protein makers like Impossible Foods and Beyond Meat. (Bloomberg)

• David Solomon is Goldman Sachs’s C.E.O. He’ll also be the D.J. at Sports Illustrated’s Super Bowl party. (Bloomberg)

Thanks for reading! We’ll see you tomorrow.

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