Future Tense

What Should Silicon Valley Companies With Saudi Money Do?

They could take the lead in a new form of international boycott.

A billboard with a portrait of Saudi Crown Prince Mohammed bin Salman.
A portrait of Saudi Crown Prince Mohammed bin Salman in the capital Riyadh on Monday. Fayez Nureldine/AFP/Getty Images

On Oct. 12, about a week and a half after Jamal Khashoggi went missing in Turkey, journalist Anand Giridharadas wrote in the New York Times about Silicon Valley’s Saudi Arabia problem. Saudi Arabia’s $250 billion Public Investment Fund invests a portion of the country’s oil revenues in companies and projects worldwide. Recently, under the influence of Crown Prince Mohammed bin Salman, a lot of that money has been invested in tech companies including Uber, DoorDash, and Slack. Giridharadas argued that Khashoggi’s disappearance was a reason for Silicon Valley to live up to its “change the world” and “do the right thing” rhetoric by returning that money.

This would be a new form of international boycott—one that involves refusing to accept cash rather than the more traditional approach based on refusing to hand it over. And because many of the tech firms that have benefited from Saudi investment are private, it would be relatively straightforward for them to implement compared with companies listed on stock exchanges, where firms can’t dictate who sells their shares to whom. While it seems an unlikely course for rapidly growing, cash-hungry Silicon Valley firms to take unless they face pressure from their customers, if any country should be a test case for an inward-investment boycott, Saudi Arabia is probably top of the list.

The Saudi government’s murder of a Washington Post columnist has drawn attention to the country’s many other misdeeds. It has been committing war crimes in Yemen for years (using U.S.-made weapons and support to commit them). It has been operating gender apartheid for far longer, with a considerable legal apparatus designed to constrain women’s abilities to travel outside the home or to work. Its treatment of people who hold dissenting views involves floggings and beheadings. Conversion to another religion from Islam carries the death penalty, as does atheism, which is considered an act of terrorism. Its gross and systemic abuse of human rights at home and abroad surely justifies condemnation and sanction.

And the Saudi regime would be a relatively easy and powerful target of government-imposed smart sanctions on the financing and activities of particular individuals. For example, the Saudi royal family enjoys a life of global luxury supported by a significant property empire. Salman recently purchased the world’s most expensive house, the Château Louis XIV in Louveciennes, France. The U.S. could lead an international effort to freeze the global resources of the House of Saud and deny its members entry except for short trips on official business. Being corralled without parole in the Stalinist theocracy they have created would be a suitable punishment and a significant lever for change.

But then there is the oil: In 2017, Saudi Arabia was only second behind the U.S. in global production, providing 13 percent of the world’s supply. And there’s the U.S. and Saudi Arabia’s shared distaste for Iran alongside comparatively warm relations with Israel. And the arms purchases: Saudi Arabia is the world’s largest customer for U.S. weapons. And the military and intelligence cooperation. Not to mention a considerable lobbying operation: A 2016 report in the Intercept listed recent payments to a long roster of firms including Qorvis, BGR Government Affairs, the Podesta Group, DLA Piper, and Pillsbury Winthrop Shaw Pittman. And, of course, the country’s generous investments and payments to the Trump business empire.

All of that makes the idea of government-led sanctions an unlikely prospect in the near term, which is where consumer and institutional boycotts come in as an alternative. The traditional model is to refuse to buy or invest. The South African apartheid regime was hit with boycotts that began with a public campaign to refuse to purchase South African fruit, cigarettes, and other goods and moved on to calling for disinvestment from South African companies. More recently, people have been urged not to spend on brands from Chipotle to Chevron. And a growing number of institutions are refusing to invest in fossil fuel companies, which the group Go Fossil Free estimates involves 991 institutions controlling more than $7 trillion in assets.

But refusing to buy or invest doesn’t work that well with Saudi Arabia. Consumers don’t know where their gas comes from when they pump it at the station, and anyway, little Saudi gas oil makes it to the U.S.—only about $18 billion worth each year. Investment boycotts aimed at Saudi domestic firms don’t mean much in a country that is desperately trying to find investment opportunities for its surplus cash. Regardless, investment boycotts on Saudi firms would face the challenge that many of the organizations most likely to take part are already disinvesting from the fossil fuel companies that would be the biggest targets.

So that leaves Giridharadas’ proposed strategy: refusing to take money rather than refusing to hand it over. There’s already some evidence of that trend emerging. Riyadh bankrolls a number of Washington think tanks, many of which are reconsidering their decisions to accept the support. Pushing companies to refuse Saudi investment is an obvious next step, because there is a lot of investment to stop thanks to the Saudi Public Investment Fund.

The fund has been rapidly expanding its tech portfolio, much of it in privately held firms. It provided 45 percent of the cash behind SoftBank’s $100 billion Vision Fund and may invest another $45 billion in a follow-up fund. Tesla’s CEO Elon Musk suggested over the summer that he might take the company private using Saudi cash, although he had to walk back the statement. (The country has now invested $1 billion in Lucid, a Tesla competitor.)

A number of Silicon Valley CEOs have expressed concern about Khashoggi’s death by pulling out from the Public Investment Fund’s “Future Investment Initiative” conference in Riyadh due to take place later in October.  But that is a considerable difference from refusing Saudi cash.  That would probably take widespread consumer outrage and threats to abandon Uber for Lyft or Slack for email and actual work, as it might be. And there’s little sign of a mass movement yet. But every further outrage committed in the name of the Saudi king should bring it closer.