Culture

Jeff Bezos’ $150 billion divorce: What you need to know

October 19, 2019
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Jeff and MacKenzie Bezos in 2017, at the Amazon Studios Golden Globes Party in Beverly Hills, California.

Jeff Bezos’ divorce announcement in January started with a seemingly heartfelt and straightforward tweet from the couple and soon after spiraled into allegations of blackmail over nude photos and a private investigation into leaked texts.

Apparently this is what it looks like when the world’s richest person gets divorced.

The split, which was finalized in early April, has transformed Bezos’ public persona from a privacy-seeking tech geek to a supermarket tabloid regular, with gossip pages dishing on the couple’s massive fortune of roughly $150 billion and on Bezos’ steamy texts to his new girlfriend.

Beyond the world of TMZ and Page Six, Jeff and MacKenzie Bezos’ divorce will have a big impact on Amazon’s ownership and create new challenges for the company. And though it’s unlikely, that turbulence could even harm consumers by slowing Amazon’s rapid pace of growth and innovation.

The divorce had been expected to result in one of the biggest and most notable settlements in history. It ultimately lived up to that hype.

‘Jeff remains very much focused on and engaged in Amazon,’ company spokesman Drew Herdener said in January.

Here’s what you need to know about the divorce and what effects it may have.

The split

Jeff and MacKenzie Bezos jointly announced their divorce via Twitter on Jan. 9, saying they decided to split ‘after a long period of loving exploration and trial separation.’ The message said they plan to remain friends. The couple married 25 years ago, the year before Bezos founded Amazon.

What wasn’t mentioned in that tweet was that the National Enquirer tabloid had reached out to Bezos two days earlier to ask him for comment on a story it planned to run about Bezos and his girlfriend, Lauren Sanchez, The Wall Street Journal reported this week.

Hours after the divorce announcement, the Enquirer reported that Bezos has been dating Sanchez, the wife of WME talent agent Patrick Whitesell. It also published a series of texts Bezos sent Sanchez, including: ‘I love you, alive girl. I will show you with my body, and my lips and my eyes, very soon.’ Sanchez and Whitesell are separated, according to several news reports.

Michael Sanchez, Lauren’s brother and a longtime source for the Enquirer, leaked those texts to the publication, according to reports by both the Journal and the Daily Beast. He hasn’t admitted that he was the Enquirer’s source. 

Jeff Bezos is Amazon’s founder, CEO, chairman and top shareholder. MacKenzie Bezos is a novelist who helped Amazon grow during its early years but hasn’t been significantly involved in the company since and has a much lower profile than her husband. The couple has four children.

Lauren Sanchez is a former TV reporter who founded an aerial film production company called Black Ops Aviation. She didn’t respond to a request for comment.

The settlement

In early April, Jeff and MacKenzie Bezos announced, via Twitter, a divorce settlement in which MacKenzie will receive 25% of Jeff Bezos’ stake in Amazon. She’s expected to be worth about $35 billion and will become one of Amazon’s four biggest shareholders.

MacKenzie Bezos agreed to hand over voting control of her shares to Jeff Bezos and gave up her stakes in the Blue Origin rocket company and in The Washington Post.

The Medium post

Things got strange a month after the divorce announcement when Bezos published a lengthy Medium post alleging an apparent blackmail plot by the Enquirer. He said the publication was threatening to release nude photos of him unless he ended a private investigation into how the tabloid got a hold of his text messages to Sanchez. He said the publication also called for him to say publicly he found no proof that the Enquirer’s reporting was politically motivated; President Donald Trump has had an ongoing feud with Bezos and has close connections to the Enquirer.

‘Rather than capitulate to extortion and blackmail, I’ve decided to publish exactly what they sent me, despite the personal cost and embarrassment they threaten,’ Bezos said in the post.

Bezos was still going through an increasingly messy and public divorce, but his revelation of the Enquirer’s apparent extortion won the billionaire a wave of positive coverage.

American Media Inc., the Enquirer’s publisher, said it would investigate Bezos’ claims.

On March 30, the plot thickened when Gavin de Becker, a private investigator hired by Bezos, alleged in a post on The Daily Beast that Saudi Arabia had hacked the Amazon CEO’s phone and accessed private information. The alleged hack was linked to coverage in The Washington Post, of the murder of Jamal Khashoggi, a Saudi reporter who wrote for paper. Bezos owns The Post. 

The Saudi embassy didn’t respond to a request for comment.

De Becker said it wasn’t clear how much, if anything, AMI knew about the alleged Saudi hack. 

In a statement, an American Media spokesperson called de Becker’s claims ‘false and unsubstantiated,’ adding that Michael Sanchez was the company’s ‘single source’ of information on the relationship. ‘There was no involvement by any other third party whatsoever.’

CNET couldn’t reach Michael Sanchez for comment.

What’s the president’s take?

Yes, even Trump has a take on this divorce. Trump has often showed his disdain for Jeff Bezos, mostly because Bezos’ Washington Post has reported many unflattering things about the commander-in-chief.

The president is known for taking digs at his enemies, so it should come as no surprise that he’s mocked Bezos amid the divorce. In one tweet in January, Trump called him ‘Jeff Bozo.’ When asked about the Bezos divorce, Trump, who’s been divorced twice, said: ‘I wish him luck. It’s going to be a beauty.’

Trump also enjoyed a victory lap after the Enquirer broke news of Bezos’ extramarital relationship. The president is close to the tabloid’s publisher and has reportedly used the tabloid to suppress allegations of his own affair.

Michael Sanchez, a Hollywood talent manager, is also connected to both the Enquirer and conservative activists. These relationships and Trump’s comments on the divorce have made plenty of people wonder whether the Enquirer reporting was an effort to go after Bezos to benefit Trump.

Bezos and Amazon routinely avoid responding to Trump’s taunts. Onlookers should expect that posture to continue.

The fortune

Nearly all of Bezos’ wealth comes from his 16% ownership in Amazon, one of the world’s most valuable publicly traded companies, valued at about $890 billion. Bezos personally owns The Washington Post, which he purchased for $250 million in 2013. The couple’s properties include two homes in Beverly Hills; two homes in Medina, Washington; the largest home in Washington, DC; and a Texas ranch, according to the Journal.

Bezos also owns Blue Origin, a rocket and space travel company he founded in 2000. He invests about $1 billion of his Amazon stock every year in developing the startup. Through Bezos Expeditions, he owns stakes in companies including Airbnb, Uber, Nextdoor and Twitter.

After being a minor player in the charity world for most of his career, Bezos in September unveiled the Day One charitable fund, with an initial investment of $2 billion to aid nonprofits focused on homelessness and to create a new network of preschools in low-income communities.

What could happen next for Amazon?

TMZ had reported that the couple has no prenuptial agreement, which meant the world’s biggest individual fortune could have been split, with Jeff Bezos losing direct control of half his Amazon stake. That didn’t happen. He will retain 75% of his original stake and maintain voting control of MacKenzie Bezos’ shares. She has not requested a seat on Amazon’s board or pushed for any changes at the company — two scenarios considered possible early in the divorce process.

Corporate governance experts have said the divorce is sure to add uncertainty for Amazon. It appears to have already created a distraction for Bezos.

‘These are hard jobs even in the best of circumstances, then you add other things in there,’ David Larcker, director of the Corporate Governance Research Initiative at Stanford’s business school, said in January. ‘Do you have the bandwidth to deal with it? Do you have your eye on the ball?’

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Jill Fisch, a professor of business law at the University of Pennsylvania, said: ‘How strong Amazon is as a company will determine how big an impact this has.’

Larcker and Fisch likened the Bezos divorce to Tesla CEO Elon Musk’s emotional issues last year and Apple co-founder Steve Jobs’ illness and death in 2011. In both cases, the impact on consumers and the products they bought from Tesla and Apple was muted. Larcker said he expects the same outcome in Amazon’s case, too, though he cautioned that a more distracted Jeff Bezos could harm long-term decisions and cause Amazon to miss out on potential acquisitions.

To avoid those kinds of issues, Larcker said, Amazon will have to rely on its bench strength of longtime Amazon executives, who include worldwide consumer business CEO Jeff Wilke, Amazon Web Services CEO Andy Jassy and senior vice president Jeffrey Blackburn. Amazon now employs about 600,000 people worldwide, meaning it isn’t run by any one person, no matter how important, and can continue to move on it own momentum at least for the short term, he added.

Has there been any impact on Amazon so far?

There have been scores of tabloid headlines, and the publishing of embarrassing texts from Jeff Bezos punctures Amazon’s typical air of secrecy. The blackmail allegations, too, likely distracted the company from its usual messaging about new products and services.  Beyond that, there’s been no clear dustup related to Amazon as a company, with its stock remaining stable since the divorce announcement.

On Feb. 15, a week after Bezos’ Medium post hit, Amazon said it scraped its plans to build a major, 25,000-employee campus in New York City. However, that decision has been widely attributed to pushback from local politicians and activists, not the divorce drama. 

Even $35 billion poorer, Bezos is likely to remain just as engaged in and motivated about Amazon’s growth, Larcker had said, since his identity is so closely intertwined with the company, and he’ll still be worth a staggering $115 billion.

There’s no lack of challenges for Bezos. He’s just starting the development of another major 25,000-employee office in Arlington, Virginia (yes, there were going to be two). His company is stretching itself into smart-home gadgets like the popular Alexa-powered Echo speakers, as well as Hollywood, health care, groceries, robotics and new international markets. Plus, competition in Amazon’s main business, online retail, continues to simmer as Walmart, Target and other traditional retailers fight to catch up.

There isn’t a lot of room for error for Bezos and Amazon. If this team stops executing as well as it has for the past few years, lots of competitors could jump ahead.

Has a similar CEO divorce happened before?

Yes, though the numbers don’t get any bigger.

Wynn Resorts founders Steve and Elaine Wynn divorced in 2010 and split their 18% stake in the casino company, which was then valued at about $1.5 billion. The breakup was amicable, but things fell apart soon after, with Elaine Wynn suing to regain voting control of her shares and eventually becoming the largest shareholder when Steve Wynn resigned amid sexual misconduct allegations.

Rupert and Anna Murdoch’s marriage of 32 years ended in 1999, resulting in Anna reportedly receiving $1.7 billion in the settlement.

There are plenty of other instances of super rich divorce settlements, but the Bezos split is likely the biggest settlement in history, with MacKenzie Bezos becoming one of the wealthiest women in the world.

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