File this one under "T" for The Law of Unintended Consequences: Tech tycoon Peter Thiel is facing a blistering storm of criticism following news that he secretly funded entertainer Hulk Hogan's crippling lawsuit against Gawker Media. The revelations have begun to shatter the billionaire Libertarian's carefully crafted "golden touch" image, and calls are rising for Facebook to oust Thiel for violating corporate ethics.
The ripple effect could undermine Facebook's new push to transition from its social niche into a full-blown global media powerhouse. Let me explain...
For those of you new to the topic, last month Peter Thiel, a Paypal co-founder and active Donald Trump supporter, admitted that he secretly put up $10 million to cover legal fees for Hulk Hogan's invasion-of-privacy lawsuit against Gawker.
That part of the story goes back to 2013, after the multi-talented entertainer (real name: Terry Bollea) sued Gawker in federal court over its publication of a sex tape excerpt. A long essay about the public's obsession with sex tapes accompanied the excerpt, and the case was thrown out on First Amendment grounds.
However, Thiel's largess enabled Hogan's attorneys to revive the case on the friendly terrain of Florida state courts, resulting in a catastrophic $140 million settlement in Hogan's favor earlier this year.
In a statement to CNN Money published on May 26, Thiel portrayed himself as a champion of the little guy, fighting for privacy rights against media bullies:
"I am proud to have supported Terry Bollea in his successful fight against a bully's gross violation of privacy," Thiel said in a statement to CNNMoney.
"Gawker, the defendant, built its business on humiliating people for sport," he said. "They routinely relied on an assumption that victims would be too intimidated or disgusted to even attempt redress for clear wrongs. Freedom of the press does not mean freedom to publish sex tapes without consent. I don't think anybody but Gawker would argue otherwise."
Thiel and others have characterized the article as an outing, a cruel intrusive invasion of privacy by a callous, grossly irresponsible online publication. That forms the root of his motivation to destroy Gawker.
However, more recent coverage indicates that Thiel's defense is a screen for the only other motivation that could top sex.
If you guessed money, run right out and buy yourself a cigar. Thiel's story of personal victimization is beginning to wither, and it is being replaced by the story of a powerful billionaire whose financial track record is not as golden as his public image suggests.
In an article published last week by the Chronicle, Thomas pinpoints the real root of Thiel's vengeance: Gawker's frequent (and frequently not terribly flattering) coverage of Thiel's business activities. The cumulative effect was to undermine Thiel's carefully crafted "Midas myth," at least to the relatively small, insidery readership of Valleywag:
...Likewise our reporting from deep inside Facebook, where Thiel wielded great influence on a small board of directors, and whose fluctuating valuation as a private company likewise drove the perception of Thiel’s success.
Thiel made some good moves — viz. Facebook — and some bad — Clarium’s assets shrank by 90 percent and Thiel quietly moved away from the hedge fund business. I’m sure he would have rather seen less coverage of his failures.
More to the point, the reference was not gratuitous. It was the central point for a (very) brief thought piece in which Thomas vigorously cheered Thiel's success as an openly gay venture capitalist in a field dominated by the"clubby ranks" of "straight, white males."
Except for the somewhat flammable headline ("Peter Thiel is Totally Gay, People"), Thomas claims that he had no salacious intent:
...In a post where I hailed Thiel, on the basis of his timely and savvy investment in Facebook, as “the smartest venture capitalist in the world,” I asked whether being gay formed part of his identity as an outsider who questioned conventional thinking in business and society...
On June 6, Forbes published an article confirming that the Hogan case was just one element in Thiel's efforts to topple Gawker.
The piece, titled "Behind Peter Thiel's Plan To Destroy Gawker," unpacks Thiel's relationship with an attorney named Harder Mirell, who appears have made a career out of suing Gawker:
…Forbes has found at least two other cases–Gawker is currently a defendant in at least a dozen lawsuits–in which Harder Mirell has worked quietly behind the scenes. One involves soliciting plaintiffs in cases that, contrary to Thiel’s claims that he’s defending those who have been wronged by the site, have nothing to do with its journalism.
On June 10, Gawker announced that it will be filing for Chapter 11 bankruptcy. The top interested buyer, Ziff Davis (now part of J2Global), is already reported to be interested in shutting down at least part of the Gawker network, leaving only the tech-oriented sites Gizmodo, Lifehacker and Kotaku.
In other words, more than a few people are going to lose their jobs, and virtually none of them had anything to do with the 2007 Valleywag article.
Facebook is still dealing with fallout from recent accusations that it suppressed news from conservative sites, which sparked an avalanche of blowback from the right side of the political spectrum. Now the company is taking heat from the left side, spearheaded by the Writers Guild of America, East.
As cited by Guild member Lauren C. Williams in a June 10 article, the Writers Guild has launched a petition calling for Facebook to take action against Thiel:
We call upon Facebook to remove Thiel from its board of directors. A person committed to silencing journalism he doesn’t like should not sit on the board of a company that serves as the portal to digital news for tens of millions of people.
The legacy publication Fortune Magazine was one of the first to provide a platform for the argument that Thiel should resign his position at Facebook. On May 31, it published an op-ed by Eleanor Bloxham, CEO of The Value Alliance and Corporate Governance Alliance, under the straightforward title, "Why Facebook Should Ask Peter Thiel to Resign from the Board."
Here is the nut of Bloxham's argument:
...when Thiel decided to fund the lawsuits, as morally challenged as many believe those actions to be, he had a duty to inform Facebook’s board that he had a conflict and would need to step down.
That’s because Gawker is a Facebook customer and supplier — and as it turns out, a vocal brand ambassador for the social media company as well...
This is not the first time that Thiel has been accused of acting in conflict with his Facebook board responsibilities, and doesn't appear that his position is actually threatened -- yet -- but the timing of the Gawker settlement, and the resulting bankruptcy, is not the best look for a company seeking to establish itself in the field of journalism.
Expect to hear less about Thiel's personal life and more about his CSR profile in the weeks to come.
Image credit: Max Warren, Flickr
Tina writes frequently for TriplePundit and other websites, with a focus on military, government and corporate sustainability, clean tech research and emerging energy technologies. She is a former Deputy Director of Public Affairs of the New York City Department of Environmental Protection, and author of books and articles on recycling and other conservation themes. She is currently Deputy Director of Public Information for the County of Union, New Jersey. Views expressed here are her own and do not necessarily reflect agency policy.