IT IS a story even a supermarket tabloid could not make up. The world’s richest man, Amazon boss Jeff Bezos, has accused David Pecker, who runs the National Enquirer and other tabloids, of trying to blackmail him over intimate photographs of Mr Bezos and his mistress. Mr Pecker is a close friend of President Donald Trump.
The lurid saga began on January 9th when the Enquirer said that it would publish an exposé of Mr Bezos’s extramarital affair, which included racy text messages. The report hit news-stands days later. Mr Bezos then hired investigators to look into the source of the leaks regarding his private life. On February 7th he struck back with a long post on Medium, a publishing website. In it he accused the National Enquirer of blackmail, claiming that it had threatened to make public photographs of him unless he agreed to drop his dispute with the Enquirer.
Mr Bezos made a point of mentioning Mr Pecker’s reported business ties to the Kingdom of Saudi Arabia, whose regime is accused of murdering Jamal Khashoggi, a columnist for the Washington Post, which Mr Bezos owns. Mr Bezos wove a web of intrigue over roughly 1,000 words that enveloped the White House, the Saudi royal family, federal prosecutors, Amazon, one of the country’s most venerable newspapers and perhaps its least venerable, the Enquirer. And, at the centre of it all, Mr Bezos himself.
It will take time for investigators to untangle precisely who did what and why, and whether crimes were committed. On February 10th the Daily Beast reported that the leak inquiry looked into whether Michael Sanchez, the brother of Lauren Sanchez, Mr Bezos’s mistress, might have leaked the couple’s texts to the Enquirer—and that Mr Sanchez believed the Enquirer pursued the story with “President Trump’s knowledge and appreciation”. (Mr Sanchez has denied leaking the texts, according to media reports in America.) Mr Trump tweeted in mock sympathy for “Jeff Bozo” after the Enquirer first published its expose of the affair.
Federal prosecutors in the Southern District of New York are reportedly examining whether American Media Inc (AMI), publisher of the Enquirer, broke the terms of an immunity and co-operation deal entered into in September, in connection with the prosecution of Michael Cohen, Mr Trump’s former lawyer, for payments made by him on Mr Trump’s behalf to aid his election. AMI admitted to helping Mr Trump’s election effort in part by paying an alleged mistress of Mr Trump $150,000 for her story in order to bury it, a practice known as “catch and kill”. As part of the immunity deal, AMI pledged not to engage in criminal activity for at least three years.
On February 10th an attorney for AMI told ABC News that the company did nothing illegal, that the Enquirer merely reported on Mr Bezos’s extramarital affair, and then conducted negotiations with Mr Bezos, in which both sides wanted something. (According to the e-mails Mr Bezos published, AMI wanted Mr Bezos to say that AMI was not politically motivated in its reporting on his affair). A lawyer experienced in tabloid litigation says that the case presents a murky legal question, in part because it is so unusual: “Normally, someone says, ‘Pay me money, or I will publish photos.’ This is a bit of a different situation.” Laws and their interpretation can vary from state to state as well. Under Federal law, a threat can count as extortion if it seeks to extract something “of value”.
Beyond its legal implications, the story holds foreboding lessons about the nature of power in the modern world. The first is about its fragility when privacy is increasingly at risk. In tabloid high jinks of yesteryear, a private eye might hope to get a snapshot outside a celebrity’s bungalow, but he could not hope to get a “dick pic”. Mr Bezos was able to stare down Mr Pecker, his alleged antagonist. But who else in powerful positions might feel more vulnerable to pressure? What cases of successful blackmail might the public never learn about?
The second lesson compounds the worries presented by the first: power is increasingly concentrated in the hands of a few global titans. Mr Bezos is a prime example, with his control of a technology platform that has become a formidable player in every space it operates, and which, via Amazon Web Services, provides cloud infrastructure for many of the world’s businesses. Even AMI appears to be an Amazon cloud client.
Critics of Mr Trump have fretted that he could be unduly influenced by the likes of Russia or Saudi Arabia, where his family has had business dealings, or that he could be the victim of “kompromat” held by Vladimir Putin. But the concentration of technological and market power threatens to turn people like Mr Bezos and Mark Zuckerberg into potential single points of failure that could be as worrying. A successful attempt at blackmail of Mr Bezos in a decade, when, say, Amazon’s Alexa devices are more widespread, would give the blackmailer a powerful media platform.
The irony is that the media platform that allegedly held the power in this affair, the Enquirer, would seem all but crumbling. Its print circulation has fallen precipitously from 2.6m in 1996 to 218,000 at the end of 2018, according to the Alliance for Audited Media. Its parent company, AMI, lost $138m from 2013 to 2015 and reported a profit of $17m in the fiscal year ending March 31 2016, while holding $394m in debt, according to a securities filing. In January the company managed to refinance its debt, raising $460m, after reportedly having difficulty doing so.
A British media executive, speaking on condition of anonymity, wonders whether any of the financing could have come from Saudi Arabia, which under Prince Muhammad bin Salman, the crown prince, has shown interest in Western media investments. In 2018 Mr Pecker reportedly sought backing from Saudi investors to make a bid for Time magazine. Last year AMI also published a glossy propaganda magazine extolling the virtues of Saudi Arabia under the prince’s leadership. On February 11th a spokesman for AMI told The Economist, "There is no investment from Saudi Arabia in American Media". But in announcing its latest refinancing, AMI did not disclose precisely to whom it owes its most recent debts. Another mystery in a very 21st-century American drama.
This post was originally posted at https://www.economist.com/business/2019/02/11/jeff-bezos-and-the-national-enquirer.