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Jeff Bezos: Extortion and Embarrassing Photos Won’t Distract Me

Jeff Bezos pre-empting the National Enquirer by laying bare embarrassing personal details may have been the easier task.

Jeff Bezos: Extortion and Embarrassing Photos Won’t Distract Me
Jeff Bezos, founder and chief executive officer of Amazon.com Inc. in National Harbor, Maryland, U.S. (Photographer: Andrew Harrer/Bloomberg)

(Bloomberg) -- Jeff Bezos pre-empting the National Enquirer by laying bare embarrassing personal details may have been the easier task. Now the world’s wealthiest man needs to convince investors that locking horns with a powerful American media organization won’t end up hurting Amazon.com Inc. itself.

Bezos, Amazon’s single largest shareholder, stunned the industry Thursday night when he accused the Enquirer of trying to blackmail him, publishing tense exchanges with the magazine that included prurient details of his relationship with former TV anchor Lauren Sanchez. The saga now threatens to snowball, exerting even more pressure on a billionaire who already oversees the biggest online retailer, a space exploration company and a leading national news outlet.

Bezos’ revelation steps up a war of words with a confidant of U.S. President Donald Trump, who’s been critical of Amazon and its founder. When the Enquirer, owned by American Media Inc., published an expose on Bezos’s relationship with Sanchez, he hired investigator Gavin de Becker to find out if the story was politically motivated. In addition to furthering that suggestion -- and how it’s possibly linked to the killing of Saudi journalist Jamal Khashoggi -- Bezos made efforts in Thursday’s write-up to cement another narrative: he’s focused.

“I asked him (de Becker) to prioritize protecting my time since I have other things I prefer to work on and to proceed with whatever budget he needed to pursue the facts in this matter,” Bezos wrote in the post.

Bezos’s move to scoop the Enquirer on its own story effectively neutralized any leverage the magazine had over him. But the longer the fight plays out in public, the bigger the threat that Bezos is perceived as distracted, said David Larcker, a professor at the Stanford Graduate School of Business who’s researched the impact of CEO controversies on companies.

Jeff Bezos: Extortion and Embarrassing Photos Won’t Distract Me

“What you don’t want to have happen is all of this lingering stuff that bleeds itself out and it just takes on a life of its own,” said Larcker, who doesn’t anticipate the controversy hurting Amazon sales at this point. “Where you worry about it is what’s happening in the executive suite. What time is it taking? Is it adding stress?”

The first whiff of controversy came Jan. 9 when Bezos posted a statement on Twitter, signed by him and his wife of 25 years, MacKenzie, announcing plans to divorce. Hours later, the first Enquirer story on his extra-marital relationship with Sanchez posted online. Bezos on Thursday said the magazine later threatened to release more details -- including selfies with partial nudity -- if he didn’t agree to stop his ongoing investigation into the publication’s motives.

Bezos accused the Enquirer and its publisher David Pecker, a Trump ally, of extortion in a bid to end that probe. Muddying the situation further, Bezos owns the Washington Post, which has written critical stories about Trump. Khashoggi was a columnist for the Post.

Bezos owns a stake of about 16 percent in Amazon. A company spokesman has said the CEO and founder remains “focused and engaged in all aspects of Amazon.” Bezos and company spokespeople haven’t addressed whether he will accelerate his periodic sales of Amazon shares, or whether the divorce will otherwise affect his holding.

For now, investors have shrugged off news of his personal life as unimportant to the value of the company, which posted revenue of $233 billion last year and a record-breaking holiday season. Now that Bezos has twice jumped in front of embarrassing news, the challenge is in maintaining the perception he can focus on his company’s growth.

“Bezos is that extraordinary, and Amazon is that extraordinary, that he can bring down a bully,” said Davia Temin, founder of the New York based crisis-consultant Temin and Co. “He’s got the courage, and the position as the richest man in the United States, and I think his courage in standing up to the extortion is going to outweigh the details behind the extortion.”

To contact the reporters on this story: Spencer Soper in Seattle at ssoper@bloomberg.net;Jeff Green in Southfield, Michigan at jgreen16@bloomberg.net

To contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net, Edwin Chan, Robert Fenner

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