Netflix and Yield


What happens when an unstoppable force (American free speech and capitalism) meets an immovable object (Saudi homicidal despots)? The unstoppable force capitulates.

According to a Jan. 1 Financial Times report, the Los Gatos-based streaming service yanked an episode in Saudi Arabia of “The Patriot Act” over host Hasan Minhaj’s condemnation of the kingdom’s murderous monarchy.

In the show’s second installment, which first aired Oct. 28, the California-bred Muslim-American comedian rebuked Crown Prince Mohammed bin Salman over the slaying of renowned columnist Jamal Khashoggi and the U.S.-backed, Saudi-led war in Yemen.

“It blows my mind that it took the killing of a Washington Post journalist for everyone to go, ‘Oh, I guess he’s not really a reformer,” Minhaj observed of 33-year-old bin Salman, who’s accused by the U.S. Senate and the CIA of orchestrating the gruesome killing.

Forsaking American notions of civil rights isn’t a new phenomenon. Hollywood has allowed Chinese censors to dictate what makes it into movies for years, while Google (who once pulled out of the Chinese market over concerns about censorship) is now working with the Chinese government to create a bowdlerized version of their search engine.

At a basic level, I can totally understand why companies accommodate Chinese suppression of free speech. China is the world’s first or second largest economy (depending on who you ask) and the world’s fastest growing consumer market. When faced with leaving billions of dollars on the table or ensuring Harrison Ford gets to star in Chinese-friendly movie, investors are going to choose that sweet, sweet cheese everytime time.

But ceding to Saudi Arabia? Surely, the Saudi Arabian market can’t be worth THAT much.

Minhaj also slammed Silicon Valley for choosing money over morals.

The crown prince has famously cozied up to tech industry elites as oil-fueled Saudi wealth became the biggest funding source for U.S. companies, including Uber, Twitter, Tesla, DoorDash, Slack and Nvidia, among others. Last year, bin Salman touched down in East Palo Alto to hobnob with bigwigs from Palantir, Clarium Capital, Valar Ventures, Andreessen Horowitz and Y-Combinator.

“WeWork won’t let you expense meat,” Minhaj remarked about the startup going vegetarian over environmental concerns, “but you take money from Saudi Arabia? So you’re against slaughterhouses unless they’re in Yemen?”

Well, shit.

When you say it that way, Netflix’s decision is totally rational. They aren’t worried about losing access to potential subscribers in Saudi Arabia—they’re worried about losing investment from the kingdom’s horrific ruling elite.

Saudi funding has become increasingly important to Silicon Valley. People buying IPOs and making big investments in American blue chip stocks aren’t middle-class day traders, they’re despots looking for ways to buy influence and shelter their wealth from the instability of the petrodollar.

The kingdom’s influence is spreading each year. Saudi money is already behind many of the biggest tech startups in the US, including Lyft, Uber and Magic Leap. Saudi Arabia’s massive $45 billion check to SoftBank’s Vision Fund, the largest venture fund of all time, means Saudi money will likely be part of the biggest pool of venture money for years to come. The Vision Fund has made at least 26 investmentsincluding into Slack, WeWork, GM Cruise, and other brand names.

How much money are we talking about?

Billions of dollars. Over the last five years, Quid estimates Saudi investors have directly participated in investment rounds totaling at least $6.2 billion. Since the exact composition of each round is not public, it’s not possible to say how much of this money came directly from the Saudis compared to other investors participating in the rounds. But the Saudis are among the world’s biggest check writers.

As the kingdom diversified its wealth away from dwindling oil reserves, financial vehicles have funneled petrodollars into Western companies. After signing just one such deal in 2009, at least a dozen investments per year have been recorded by Quid since 2012.

. . . .

Saudi Arabia’s money is in multiple funds with global ambitions. One of the biggest is the Saudi Public Investment Fund, which said it plans to grow from around $100 billion today to $2 trillion by 2030. Among the public funds investing in US companies, the top ones tracked by private equity research firms are listed below.

I guess the price of freedom is a lot more than the blood of patriots. If our corporate overlords won’t save us, let’s hope the rank-and-file workers of the tech and finance sector will.


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