Amazon Part 6: The Billionaire and the Tabloid

Summary

Foundering: Amazon Part 6 - The Billionaire and the Tabloid

Release Date: April 7, 2022
Host: Brad Stone
Produced by Bloomberg Technology

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Introduction

In the sixth episode of Foundering, titled "The Billionaire and the Tabloid," host Brad Stone delves into the tumultuous personal and professional upheavals surrounding Jeff Bezos, the CEO of Amazon and then the world's richest man. This episode unpacks the shocking divorce of Bezos, the ensuing tabloid scandal involving the National Enquirer, and the intricate web of investigations that followed, highlighting the intersection of personal lives, media manipulation, and corporate leadership.

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Jeff Bezos Announces Divorce

[01:25]
Brad Stone sets the stage by recounting a pivotal moment on January 9, 2019, when Jeff Bezos publicly announced his divorce from his wife, Mackenzie Bezos, after 25 years of marriage.

Brad Stone: "January 9, 2019, at precisely 6:07 in the morning, Pacific time was a massive turning point in the life of Jeff Bezos."

The announcement stunned colleagues, acquaintances, and friends alike, as the couple had maintained a facade of a stable and loving relationship both personally and professionally.

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National Enquirer’s Scandalous Revelation

[02:30]
Shortly after the divorce announcement, the National Enquirer published an explosive story alleging that Bezos was involved in an affair with Lauren Sanchez, the wife of Hollywood agent Patrick Weitzel.

Craig Berman (Former VP at Amazon): "It was shocking when it came out because it was completely unexpected."

The tabloid went further by leaking intimate text messages and photographs, including allegations of a compromising "dick pic," thereby fracturing Bezos's carefully cultivated public image as a devoted family man.

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Investigation into the Leak

[16:51]
Bezos responded by asserting that he was being blackmailed by the National Enquirer. In a notable essay on Medium, he revealed that he had hired renowned private investigator Gavin de Becker to uncover how the tabloids obtained his private communications.

Brad Stone: "In his essay, Bezos said he had hired private investigators to learn how the National Enquirer had gotten his text messages."

Bezos speculated about possible motives, hinting at a broader conspiracy possibly involving enemies of the Washington Post—a publication he owns—that had recently criticized powerful figures like Donald Trump and highlighted the murder of journalist Jamal Khashoggi by Saudi agents.

Brad Stone: "He suggested the real culprits of his leaked photos might have been enemies of the Washington Post."

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Lauren Sanchez’s Brother: Michael Sanchez

[21:24]
The investigation led Gavin de Becker to Michael Sanchez, Lauren Sanchez's older brother and a Hollywood talent manager. Michael emerged as a key suspect in leaking sensitive information to the National Enquirer.

Gavin de Becker: "Michael Sanchez has been among the people we've been speaking with and looking at. Strong leads point to political."

Michael vehemently denied involvement, labeling the accusations as "sloppy leaks and crazy conservative conspiracy theories." However, inconsistencies in his statements and his attempts to shift blame raised suspicions.

Craig Berman: "The most unsettling thing was that Bezos preached good decisions and sound judgment within the company. It was like Bezos had violated his own code."

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Theories of a Saudi Conspiracy

[30:55]
Amidst mounting evidence pointing to Michael Sanchez as the sole leaker, Bezos and investigators entertained the possibility of a more sinister involvement. Gavin de Becker hypothesized that the Saudis might have accessed Bezos's phone, considering the backlash Bezos faced from Saudi-affiliated online hate groups due to the Washington Post's coverage of Khashoggi's murder.

Brad Stone: "For the past few months, an online army of Twitter accounts had been attacking Bezos. The accounts are believed to be linked to Mohammed bin Salman, the Crown Prince of Saudi Arabia."

Despite these theories, no concrete evidence emerged to substantiate claims of Saudi involvement. Investigations by the FBI and the Manhattan District Attorney eventually found no grounds to pursue these allegations.

[40:35]

Brad Stone: "The FBI and federal prosecutors looked into this tangle of accusations and dropped the matter without bringing any charges at all."

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Michael Sanchez’s Legal Battles and Revelations

[33:15]
As the scandal unfolded, Michael Sanchez took legal action against the National Enquirer, Bezos, and investigator Gavin de Becker, alleging defamation. These lawsuits inadvertently clarified his role in the leak.

Brad Stone: "In the litigation, court documents showed Sanchez had signed a contract with the Enquirer, paying him $200,000 for the story."

Testimonies from National Enquirer reporters confirmed that Michael was the sole source of the sensitive information, effectively debunking Bezos's broader conspiracy theories.

Brad Stone: "They said under oath that Sanchez was their sole source of information and that the Saudis had nothing to do with it."

Despite losing the lawsuits and being ordered to pay Bezos $208,000 in legal fees, Michael's actions had already irrevocably damaged his credibility and personal relationships.

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Aftermath and Repercussions

[44:22]
The fallout from the scandal had significant implications for Bezos and Amazon. Bezos's public image shifted from a devoted family man to a figure embroiled in controversy, which clashed with the company's values of modesty and frugality. This dissonance raised concerns among stakeholders and prompted introspection about the future leadership of Amazon.

Craig Berman: "He certainly did defeat in spectacular fashion, an outlet that was really, really coming after him hard."

Ultimately, Bezos transitioned away from his role as Amazon's CEO, stepping down to focus on other ventures such as his space exploration company, Blue Origin, marking a new chapter in his personal and professional life.

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Conclusion

In "The Billionaire and the Tabloid," Brad Stone masterfully navigates the intricate saga of Jeff Bezos's personal upheaval and its intersection with media manipulation and corporate leadership. The episode illuminates how personal indiscretions can ripple through professional spheres, challenging even the most meticulously crafted public personas. Through detailed investigation and compelling narratives, the story underscores the fragile balance between personal privacy and public scrutiny in the age of pervasive media.

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Notable Quotes

• Brad Stone [01:25]: "January 9, 2019, at precisely 6:07 in the morning, Pacific time was a massive turning point in the life of Jeff Bezos."

• Craig Berman [02:06]: "It was shocking when it came out because it was completely unexpected."

• Brad Stone [16:51]: "Although Bezos got to announce his impending divorce himself, he couldn't contain the maelstrom."

• Brad Stone [30:55]: "Gavin theorized that by the time Sanchez gave the tabloid paper the goods, the Enquirer had already seen text messages between the couple."

• Craig Berman [44:49]: "He definitely pulled off this victory against a news publication."

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Production Credits

Foundering is hosted by Brad Stone, with Sean Wen as the executive producer, Ray Mondo serving as the audio engineer, and Molly Nugent as the associate producer. The team also includes story editors Mark Million, Ann Vanderme, Robin Agello, and Molly Schutz, with special thanks to Mark Bergen. Francesca Levy leads Blue Bloomberg Podcasts. Subscribe to Foundering and share it with friends to stay informed on high-stakes dramas in the technology industry.

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This summary was generated based on the transcript provided and adheres to the guidelines of skipping advertisements, intros, outros, and non-content sections to focus solely on the episode's core narrative.

Transcript

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[Brad Stone]

January 9, 2019 at precisely 6:07 in the morning, Pacific time was a massive turning point in the life of Jeff Bezos.

[Michael Sanchez]

It's the divorce that has the tech world buzzing.

[Host]

Jeff in the corner, please.

[Michael Sanchez]

The world's richest man, Amazon CEO Jeff Bezos, announcing he and his wife, Mackenzie, are splitting up after 25 years.

[Brad Stone]

Bezos kicked all of this off by.

[Michael Sanchez]

Sending a tweet, the couple releasing a joint statement Wednesday, reading in part, after a long period of loving exploration and TR separation, we have decided to divorce and continue our shared lives as friends. If we had known we would separate after 25 years, we would do it again.

[Brad Stone]

This was shocking news to their colleagues, acquaintances, even casual friends. Most people had no reason to believe the relationship was strained. Of course, couples get divorced all the time. It's what happened next that changed the course of the Amazon story. Later that day, a newspaper tabloid reported that Bezos was seeing another woman. What happens when one of the richest.

[Host]

Men in the world decides to divorce.

[Brad Stone]

His wife and then starts dating the.

[Host]

Wife of one of the most powerful men in Hollywood?

[Brad Stone]

So wait, Jeff Bezos had a girlfriend. Bezos had presented a picture of an amicable separation in his tweet. But within just a few hours, reports in the news media were complicating his tidy narrative.

[Michael Sanchez]

Not long after Amazon CEO Jeff Bezos and his wife Mackenzie announced they were divorcing after 25 years of marriage, reports surfaced that Bezos had been dating TV personality Lauren Sanchez. She's now separated from her husband, Patrick Weitzel. He's the co CEO of the Hollywood agency WME and reportedly introduced Bezos to his wife. All three were photographed together at an Amazon party.

[Brad Stone]

Soon, it became clear that the infamous supermarket tabloid, the National Enquirer was ready to publish the entire story. It had the couple's private romantic text messages. The media had a field day on the real A daytime talk show host, Loni Love lampooned the text messages with a dramatic reading. You know what I want? I want to get a little drunk with you tonight. Not falling down? No, just a little drunk. I want to talk to you and plan with you, listen and laugh. I basically want to be with you.

[Michael Sanchez]

When I want to fall asleep with.

[Brad Stone]

You and wake up tomorrow and read the paper with you and have coffee with you.

[Michael Sanchez]

Yes, meet the paper and see.

[Brad Stone]

And of course, even the President of the United States joined the pylon.

[Host]

Well, I wish him luck.

[Brad Stone]

I wish him luck. It's gonna be a beauty. Here was the world's then wealthiest man, a business icon having an adulterous relationship. And even more shocking, getting busted by a sleazy tabloid. Inside Amazon, employees and executives were flabbergasted. Here's former VP Craig Berman.

[Craig Berman]

It was shocking when it came out because it was completely unexpected. And that was a turn that I'm not even sure Hollywood could come up with that kind of plot twist.

[Brad Stone]

You're listening to Foundering. I'm your host, Brad Stone. The leaked story about Bezos affairs pose several mysteries. What happened to the Bezos marriage? How did Bezos get involved with Lauren Sanchez, a former TV anchor? But most pressing of all, how did the National Enquirer get Jeff Bezos personal text messages as well as intimate photographs, including, as they claimed at the time, a dick pic. I spent several months unraveling these questions and also looking into a huge allegation posed by Bezos himself that there may have been a global conspiracy to embarrass him. The resulting saga touched on the Washington Post journalistic freedom, Donald Trump, the crown prince of Saudi Arabia, and the murder of dissident journalist Jamal Khashoggi. Unbelievably Bezos managed to come out ahead. In a stroke of prg, he turned the tables on his tabloid adversaries. But in the end, the entire episode would have enormous repercussions for Bezos and for Amazon, a company nearing a 1 trillion dollar market value at the very height of its control over the Internet and the US Economy. It's the tech mogul versus the tabloid. We'll tell you that story after the break.

[Michael Sanchez]

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[Brad Stone]

All tech companies need a powerful founding story. And the story of Jeff and Mackenzie driving to Seattle after leaving New York City in 1994 has been part of Amazon's mythology from day one. In April 2018, Axel Springer CEO Matthias Dufner asked Jeff Bezos about it in an onstage interview.

[Host]

The launch of Amazon was really something that you did together. Oh, yeah. Could you describe a little bit what MacKenzie's role was? Well, first of all, McKinsey, she had married this stable guy working on Wall street, and a year after we got married, I went to her and said, I want to quit my job, move across the country and start this Internet bookstore. And McKinsey, of course, like she said, great, let's go. Because she wanted to support it and she knew that I had always had this passion for invention and starting a company.

[Brad Stone]

It's a story that Bezos had been telling for more than 20 years, that McKinsey's acceptance of his dot com dream was key to the company's founding. Here he is talking to Henry Blodgett of Business Insider in 2014. You turned 50 recently?

[Host]

Yeah. Any change, outlook on life? No, not really. You know, I'm still dancing into the office. I love my life. I have four kids. My wife claims to still like me. I don't question her aggressively on that. I do the dishes every night and I can see that actually makes her like me. It's a very odd thing.

[Craig Berman]

I do that too.

[Host]

I'm pretty convinced it's like the sexiest thing I.

[Brad Stone]

His wife humanized him. She made him seem like more than a businessman whose creation was upending retail and devastating small merchants. In the early days of Amazon, Mackenzie was integral to the business of the company. She was Amazon's first accountant. As the company added employees, she was able to move away from the day to day business of Amazon and pursue her own interests. At Princeton, she had studied to be a writer. She published two novels called the Testing of Luther Albright and Traps. In one of her rare public appearances, Mackenzie Bezos described her then husband as one of her best readers. Here she is in conversation with Charlie Rose in 2013. He's such a good reader and I wanted to get his reaction to the actual story so that he was. So that he could be surprised in the right places. You know, I still have the copy he read. It's great because he very generously went through and wrote all the spots that made him laugh out loud and all the spots that made him cry. Mackenzie illuminated another side of Bezos. It was quite endearing that he was the kind of husband so supportive of her that he would read and mark up her manuscripts line by line. Here was somebody routinely accused of killing books, actively making one better. Inside Amazon employees viewed Bezos as a family man. Craig Berman, a former communications executive, worked directly with Bezos for over a decade.

[Craig Berman]

In my experience in working closely with him, family was everything to Jeff. He was extremely, and still is extremely close to his family. The reverence he has for his parents is as high as it gets. And that flowed into his own personal family.

[Brad Stone]

Mackenzie was no longer active at Amazon after the earliest days, but Craig says her opinion was still highly valued. She came in to help Bezos prepare for the most high stakes presentations, including the unveiling of the Kindle So Kindle.

[Craig Berman]

Came out as very, very newsworthy. And Jeff was front and center unveiling these products on stage. And there was an extraordinary amount of preparation. MacKenzie did come in and she would sit in the audience and watch Jeff go through multiple rehearsals and she would provide feedback.

[Brad Stone]

In these moments, Craig and all the Amazon employees could see the deep respect that Bezos had for his wife. It came across as a marriage of equals.

[Craig Berman]

I think he absolutely trusted her judgment and valued her perspective. And I think Jeff appreciated having a really smart person who could be pretty objective. You know, we would prepare for it. It's like this is a rehearsal that mackenzie's coming to.

[Brad Stone]

Now, who can really say what happens inside the private confines of a marriage? But clearly, over the years, Bezos and Mackenzie grew apart. She was a bookish writer who rarely made public appearances, and as far as I can tell, she's virtually unknown in Seattle social circles. Bezos was drawn to public events, the trappings of wealth and the lure of adventures like scuba diving and space travel. As we discussed in an earlier episode, he also gravitated to Hollywood and the bright lights of celebrity. On December 3, 2016, he hosted a star studded Hollywood party at his home in Beverly Hills. Mackenzie was nowhere to be found, and one of the guests was a woman named Lauren Sanchez. She had her own helicopter video production company and she was a veteran broadcaster, the former host of the tabloid TV show Extra and the morning program Good Day la. Here she is doing a TV segment on a private jet company.

[Michael Sanchez]

Not that it's an option for everyone, but Flight Options is a company that offers private jets. You don't even understand how exciting this is for me. This is the most amazing plane. And look, I want to take you inside this beauty. It is unbelievable.

[Brad Stone]

Lauren was at the party with her then husband, Patrick Weitzel. He's a major Hollywood agent. At the party, Bezos was photographed with Lauren and Patrick. I'm not entirely sure if that's the first time they met, but it's clear that after the party, Bezos and Loren started seeing more of each other. And by the beginning of 2018, Lawrence Helicopter Company was filming documentary videos for Bezos private space company, Blue Origin.

[Host]

Now is the time to open the promise of space to all and lay the way for generations to come. We are of blue Origin, and this is where it begins.

[Brad Stone]

Sometime that year, it appears they started dating. Strangely, Bezos carried on the relationship out in the open, even though he was still married. His total disregard for public attention was baffling. Either he didn't anticipate the coming avalanche of negative publicity or he didn't care. They were photographed at a hotel in Miami and at fancy restaurants in Venice beach and Santa Monica. That December, Bezos had another celebrity filled party for Amazon Studios at his Hollywood home. Once again, Mackenzie wasn't there. This time, Lauren was by his side. So it was probably inevitable that someone would reveal their affair and that Bezos would try to get ahead of the story by tweeting news of his divorce. Here's Craig.

[Craig Berman]

I was personally stunned. Like jaw dropping to the floor, stunned. My colleagues were just as stunned. I think that was the universal reaction. It was so unexpected coming from this person who really, I mean, you talk about a reverence within an organization. Those, those types of things just didn't happen. And so for it to happen at that level that the surprise factor was off the chart.

[Brad Stone]

Craig says that the most unsettling thing was that Bezos preached good decisions and sound judgment within the company. It was like Bezos had violated his own code. His employees felt let down.

[Craig Berman]

This is a person and a company that put such a premium on having good judgment. And here was an incident where it looked like this person maybe wasn't displaying a level of judgment that, that people expected of him. And I think it was really jarring.

[Brad Stone]

Although Bezos got to announce his impending divorce himself, he couldn't contain the maelstrom. The affair was revealed, the intimate text messages were leaked. And then things got even weirder. A few weeks later, on February 7th, Bezos posted a remarkable essay to Medium saying that he was being blackmailed. I asked my colleague to read a selection of it. Something unusual happened to me yesterday. Actually, for me, it wasn't just unusual. It was a first. I was made an offer I couldn't refuse. Or at least that's what the top people at the National Enquirer thought. I'm glad they thought that because it emboldened them to put it all in writing 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. This was entirely unprecedented and there's a lot to unpack in here. In his essay, Bezos said he had hired private investigators to learn how the National Enquirer had gotten his text messages. The Enquirer seemed desperate to shut it down, and Bezos copied and pasted entire emails from the Enquirer's editor in chief. In the emails, the editor seemed to threaten to publish the intimate photographs that Bezos had exchanged with his girlfriend. Including something the editor called a below the belt selfie. In his essay, Bezos poses the why was the National Enquirer so desperate to stop his investigators from sniffing around? This is where Bezos leaves the realm of established facts. He starts to construct a hypothetical case. He suggested the real culprits of his leaked photos might have been enemies of the Washington Post. Remember, Bezos owns the Post, and the Post had a long list of enemies. In 2019, they had aggressively covered the Trump presidency. That's one enemy. Also, a few months before, a columnist for the Post named Jamal Khashoggi was brutally murdered by Saudi agents. And the Post comprehensively reported on this atrocity. That made the Post a new enemy. The government of Saudi Arabia, whose crown prince allegedly ordered the killing. By the way, the crown prince denies this. Bezos just sort of put these things out there. He never says it explicitly, but he leaves readers to connect the dots that maybe his intimate text messages were leaked because of some connection between the National Enquirer, Donald Trump, the Saudi government and their common enemy, the Washington Post. Here's an excerpt of what he My ownership of the Washington Post is a complexifier for me. It's unavoidable that certain powerful people who experience Washington Post news coverage will wrongly conclude I am their enemy. For reasons still to be better understood, the Saudi angle seems to hit a particularly sensitive nerve. The essay melted the Internet in media and tech circles. It was all anyone could talk about at the time. I'm writing a book about Amazon and Bezos and I have the uncomfortable revelation that the story is moving in a completely unexpected and tawdry direction. To write a book about this iconic tech leader, I'm going to have to write about his sex life. And I have to examine whether Bezos was the victim of a global conspiracy. Were his real adversaries tabloid journalists or the enemies of the Washington Post and the free press? We'll unravel that mystery next. Okay, so the National Enquirer published an 11 page spread about Bezos's affair with Lauren Sanchez. And Bezos is now waging an all out war with the tabloid, trying to understand how they got his text messages. He hired a very powerful private investigator named Gavin de Becker. This guy is kind of a legend in the security field. Here's Gavin describing his credentials in an editorial about his work for Bezos. I asked my colleague to read what he wrote.

[Host]

For 40 years, I've advised at risk public figures and government agencies on high stakes security matters. My career has included working with the CIA, FBI, at the Reagan White House, counseling foreign leaders and advising on controversial murder cases. I've seen a lot and yet I've recently seen things that have surprised even me.

[Brad Stone]

Almost immediately, Gavin's suspicions fell on one of Lauren Sanchez's closest confidants, her older brother, Michael. Michael was a Hollywood talent manager who had helped Lauren with her career over the years. He later spoke to Fox News about his relationship with his sister.

[Host]

I've been managing Lauren since the day she came home from the hospital. And through the highest of highs and lowest of lows, I've always been there to do whatever she needs and to protect her whenever she needs protection.

[Brad Stone]

To me, Michael sounds a bit defensive. Here he's trumpeting his professional relationship with his sister, all claiming that she needs his protection, as if he's the guardian of an accomplished 50 year old woman. And as we'll come to find out, Michael Sanchez was deeply involved in his sister's life. He went out for dinner several times with Bezos and Lauren while they dated. And he even attended another star studded party at Bezos home. He described his first impressions of Jeff Bezos to Fox News.

[Host]

Well, to be perfectly honest, I didn't want to like him because it would have made all of our lives much simpler. But when I met him, he was charming, brilliant, loved flying, and everyone in our family is pilots, so we had a lot to talk about. And most importantly, he was deeply in love with Lauren.

[Brad Stone]

Michael is one of the strangest people I've ever interviewed for a business story. He's charismatic and charming, full of swaggering confidence and gossip. But he's also full of contradictions. He's an avid Trump supporter and he's gay. He styles himself as a public relations guru but imagines he has complete control over the media, which of course is impossible. As soon as his name surfaced as a leaker in the Bezos affair, Michael Sanchez said that any hint of his involvement was crazy. One source close to Jeff Bezos private investigators tells CBS News they've conducted multiple interviews with Michael Sanchez, the brother of Bezos own girlfriend. They say Sanchez, a Trump supporter, discussed the matter with Roger Stone and Carter Page, two of Mr. Trump's stauchest defenders. Contacted by CBS News, a person close to Michael Sanchez dismissed allegations of his involvement as, quote, sloppy leaks and crazy conservative conspiracy theories. Gavin de Becker confirmed to the Daily Beast that his firm did speak to Michael Sanchez. And in their conversations, several things struck them as highly unusual. Gavin's firm says Michael shared outlandish theories about how the enquirer might have learned about Bezos affair with his sister. He suggested that the Deep State or American spies might have hacked into Bezos phone. He also bragged about his ties to right wing Trump world types. And he suggested that he knew the editor of the national enclosure and kept bragging about how he could manipulate the paper's coverage. By the end of these phone calls, the private investigator was convinced that Bezos girlfriend's brother was a culprit. Soon Bezos camp starts talking to the press too. I asked my colleague to read for Gavin de Becker.

[Host]

Michael Sanchez has been among the people we've been speaking with and looking at. Strong leads point to political.

[Brad Stone]

That's from an interview Gavin de Becker gave to the Daily Beast. And probably no coincidence, the Daily Beast is owned by Jeff Bezos friend Barry Diller. So then in a non televised interview with Fox News, Michael Sanchez defends himself. Sort of. Here's anchor Howard Kurtz describing their conversation.

[Host]

The notion that Lauren Sanchez's brother Michael Sanchez, a Hollywood talent manager, was somehow responsible for this. It didn't just sort of bubble up out of nowhere. Sources at AMI and even the lawyer for David Pecker, the Enquirer owner who's a close friend of President Trump, have kind of tried to finger him. But Michael Sanchez told me on the record that there are in fact multiple suspects, that he's never seen any of the salacious pictures or texts and that in fact any attempt to implicate him this is 100% false. Those are his words.

[Brad Stone]

So Michael Sanchez is out there talking to the media, denying everything. And this puts the National Enquirer in a very awkward position. The guy there hinting as their confidential source is saying he's not their confidential source. And if Michael isn't the source, then it sort of lends credibility to Bezos theory that the Inquirer is involved in some sort of political conspiracy. This was something the Inquirer absolutely wanted to shut down because they were already in hot water for something else.

[Michael Sanchez]

Tonight, the publisher of the National Enquirer making headlines of his own. David Pecker granted immunity by federal prosecutors investigating Michael Cohen, the President's former fixer. According to a source familiar with the matter. Pecker's a longtime friend of the President's who helped catch and kill negative stories about him, including according to Cohen, having his company pay a woman for extra exclusive rights to her account of an alleged affair with Donald Trump, one he.

[Brad Stone]

Denied before the Bezos ordeal. The National Enquirer was caught in an unrelated scandal involving another rich guy and his alleged Affair. In that case, it was Donald Trump and an adult actress named Stormy Daniels. The publisher of the Enquirer is a longtime friend of Trump's, and the tabloid went to unusual lengths to protect him. Essentially, they interviewed Stormy Daniels and other women who claimed to have damaging information about Trump. They bought the exclusive rights to the women's stories, and then they never ran the articles. And because the Enquirer had exclusive access, the women had no way to get their stories out. This practice is known in the media business as catch and kill because they catch an elusive piece of information and then kill it by suppressing the story. This became a problem for the Enquirer after Trump became a candidate for president because it could be seen as a violation of campaign finance laws. Not good. Eventually, their publisher, AMI, signed a deal with the U.S. attorney's office for the Southern District of New York. If they violate the deal, their executives could be charged with a crime. So they were very sensitive to accusations of wrongdoing, especially charges that they were once again working with the Trump administration or, say, the Saudi government. This is all happening in the background when the Inquirer goes to war with Bezos. So with the catch and kill scandal hanging over their heads, the National Enquirer is about to do something very, very un. After the allegations of Saudi involvement, the National Enquirer's lawyers also hit the TV circuit. It's taboo for news organizations to talk about their off the record sources. But to people watching the saga unfold, a lawyer for the Enquirer's parent company, ami, seemed to come very close to doing just that on tv. Here's attorney Elkana Abramowitz on ABC with George Stephanopoulos.

[Host]

It absolutely is not extortion and not blackmail. What happened was the story was given to the National Enquirer by a reliable source that had given information to the National Enquirer for seven years prior to this story. It was a source that was well known to both Mr. Bezos and Ms. Sanchez.

[Brad Stone]

Was it Michael Sanchez?

[Host]

I can't discuss who the source was. I will just. It's confidential within ami, so I'm not going to answer who the source was. It was somebody close to both Bezos and Ms. Sanchez.

[Brad Stone]

It's crazy to me that a lawyer for the paper is on TV dropping hints about the confidential source of their story. But you got to keep in mind that it's in the National Enquirer's best interests if the story starts and stops with one leaker without any political conspiracies. So case closed, right? A Brother sells out a sister either for money, notoriety or jealousy. Really, it all should have ended right there. But things were about to get even more complicated because for whatever reason, Bezos and Gavin remained attached to the possibility that there were political motives between behind the whole thing. So they take one more swing at saying the Saudi government had something to do with Bezos leaked romantic text messages. In March, Gavin wrote a guest article for the Daily Beast. In the essay, he again points a finger at Michael.

[Host]

But he added, reality is complicated and can't always be boiled down to a simple narrative like the brother did it.

[Brad Stone]

Gavin theorized that by the time Sanchez gave the tabloid paper the goods, the Enquirer had already seen text messages between the couple. In other words, Gavin suggested there was a second culprit and he was now convinced that wrongdoer was overseas.

[Host]

Our investigators and several experts concluded with high confidence that the Saudis had access to Bezos phone and gained private information. As of today, it is unclear to what degree, if any AMI was aware of the details.

[Brad Stone]

Now this might sound outlandish, but Gavin and Bezos did have solid reasons to believe the government of Saudi Arabia was out to get him. For the past few months, an online army of Twitter accounts had been attacking Bezos. The accounts are believed to be linked to Mohammed bin Salman, the Crown Prince of Saudi Arabia. Their tweets called for a boycott of Amazon's website in the Middle East. Here's a sample tweet. It's pretty horrible. We're after you. The Jew worshipper of money will go bankrupt by the will of God at the hands of Saudi Arabia. The owner of Amazon and Shook is the owner of the Washington Post is the spiteful Jewish who insults us every day. By the way, Bezos is not Jewish. But it didn't matter. The Saudi government's hatred of Bezos was real. They blamed him for the Washington Post's coverage of the murder of Jamal Khashoggi. And though there was no real evidence that the Saudis were the original leakers to the Inquirer, people kind of lapped it up. Here's the thing. The idea that Bezos had been targeted because of his brave ownership of the Washington Post was kind of compelling. So public opinion swung over to Bezos camp. After that, the only question left is whether the Saudi theory was even real. In the spring of 2019, the FBI and federal prosecutors set out to investigate. The truth of this tangled saga was finally going to come out. That's next.

[Michael Sanchez]

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[Host]

Business and get more from your Internet.

[Brad Stone]

Without paying more for your Internet. Get LTE Business Internet starting at $39 a month when paired with a business Unlimited smartphone plan. That's unlimited data and with it unlimited possibilities. Start saving today with Verizon business ranked number one in small business Internet customer satisfaction by J.D. power starting price for 25 Mbps Internet plan with savings plus taxes, fees and economic adjustment charge terms apply for J.D. power 2024 award information. Visit J.D. power.com awards over the spring of 2019, the National Enquirer removed its editor in chief and their parent company ami, put out a remarkable statement explicitly denying that there was any conspiracy or mystery at all to the origins of their story. The fact of the matter is it was Michael Sanchez who tipped the National Enquirer off to the affair on September 10, 2018, and over the course of four months provided all of the materials for our investigation. His continued efforts to discuss and falsely represent our reporting and his role in it has waived any source confidentiality. There was no involvement by any other third party whatsoever, so the National Enquirer was no longer dancing around it. Lauren Sanchez's brother was the sole leaker. It would seem like they broke a fundamental principle of journalism by revealing their secret source, but I actually have some sympathy for the National Enquirer here because I spent months talking to Michael when I was reporting my book Amazon Unbound. He asked that I use the following statement in my Everything I did protected Jeff, Lauren and my family. I would never sell out anyone. I also spoke to Michael confidentially, meaning I wasn't planning on revealing him as a source. But when he read the conclusions in my book that he was the lone source of information to the Inquirer, he strongly disagreed and he started Acting out against me this time, over the course of 2021, he emailed many high profile journalists about our conversations, accusing me of sloppy reporting and cherry picking facts to cast him in a bad light. So because he outed himself is one of my sources, I feel free to discuss it now. See, Michael and Lauren had a complicated relationship. They fought over money and they were frequently estranged. In our conversations, Michael had a lot of bad things to tell me about his sister. He criticized her intelligence, her personal relationships, and her skills as a broadcaster. He also thought very highly of himself and he seemed to deeply believe that he could control the media. It was a dangerous combination. One mystery that Michael cleared up for me was whether the National Enquirer ever had a dick pic from Jeff Bezos. Remember, the Enquirer claimed they did and they threatened to publish it. As all this was happening, Michael claimed in the press that he never sent the Enquirer a dick pic. And he went so far to suggest that if such a photograph existed, then there must have been a second leaker. This really angered the Inquirer because again, it opens the door to the suggestion that there might be some bigger conspiracy. So I'm talking to Michael about all this for several months. And one day, over drinks in the Castro neighborhood of San Francisco, he told me what I believe is the truth. He said that for weeks he tantalized the Inquirer editors with the notion that he did have a dick pic. Then he met with one of their reporters in person, and they FaceTimed the paper's two top editors. And this is when he showed them a photo that he had downloaded from a site called rentmen.com. so basically, he told me that he pulled one over on the Inquirer. They believed they had the incriminating photo, and they did have a dick pic, just not one belonging to Jeff Bezos. When all this finally came out that Michael Sanchez was playing all sides, he was furious, and he launched a volley of lawsuits against ami, the editor in chief of the Enquirer, Jeff Bezos, and Bezos investigator Gavin de Becker. He charged them with defamation, and ironically, Michael's lawsuits ended up clarifying the whole matter. In the litigation, court documents showed Sanchez had signed a contract with the inquirer paying him $200,000 for the story. And the reporters and editors said under oath that Sanchez was their sole source of information and that the Saudis had nothing to do with it. Sanchez ended up losing most of those cases and had to pay Bezos $208,000 for legal fees. It's Pretty ironic that he paid out to Bezos almost the exact amount of money that he was paid by the Inquirer. In the end, Michael Sanchez's story is kind of sad. He could have been living large with Bezos and Lauren on their mega yachts and opulent vacation properties. But first he betrays his sister, and then he just keeps betraying himself by constantly gossiping to the press. And by launching these failed lawsuits, he loses his relationship with his sister, then his credibility, and then he loses a large sum of money. So was there any truth to the idea of a global conspiracy that the Saudi government may have hacked Bezos phone in retaliation for the Washington Post coverage of the murder of Jamal Khashoggi? Well, this was also a matter of confusion and contradictory information. In early 2020, the Guardian published a report claiming that Bezos phone was hacked, that he had downloaded a piece of spyware called Pegasus. We're learning new details of an extraordinary claim that Amazon CEO Jeff Bezos phone was hacked by Saudi Arabia.

[Host]

The Guardian reports an investigation ordered by.

[Brad Stone]

Bezos blames the hacking on a personal message that apparently came from Saudi Crown Prince Mohammed bin Salman. I talked to several security experts who weren't convinced there was any real evidence Bezos's phone was hacked. And on top of that, there was zero evidence that even if he was hacked that that was how his private information had been leaked to the National Enquirer. And finally, both the FBI and the Manhattan DA looked into this tangle of accusations and dropped the matter without bringing any charges at all. So why did we hear so much about this story? Remember, Bezos wrote about it in his Medium Post and his investigator brought it up in the media at least twice. Well, it suggests a few possibilities. One is that Bezos sincerely believed that he was hacked and the Saudis were involved and he wanted to expose the Inquirer for their role in the treachery. Another option is more cynical. That Bezos didn't truly believe it, but he wanted to distract from the much more mundane, depressing story that he was caught cheating on his wife and that his girlfriend's brother sold them out. I asked Craig Berman, the former Amazon vp, what he thought Bezos believed.

[Craig Berman]

My guess, and again, I'm speculating. My guess is they, he and his advisors felt comfortable that they had gotten to some facts and felt comfortable enough to go out and confront those facts. I think they executed it really well. I think they achieved what they were trying to do. Now, whether or not it was the true fact or not, I don't know. And so if it was meant to get people off the trail of something else, it may have been effective in.

[Brad Stone]

That I don't think we will ever know for sure if Bezos phone was really hacked and if he thought the Saudis had tipped off the Enquirer. But I think ultimately Bezos and his handlers were happy to muddy the waters. Letting the confusion and ambiguity about a possible global conspiracy swirl around made Bezos look good. It allowed him to keep alive the possibility that his brave support of his newspaper, the Washington Post, was the source of his personal troubles. Around a year after the Enquirer story published, he spoke at a memorial for Jamal Khashoggi. Here he is addressing Khashoggi's fiance.

[Host]

No one should ever have to endure what you did. It is unimaginable. And you need to know that you are in our hearts. We are here, and you are not alone.

[Brad Stone]

In this epic battle between the National Enquirer and Jeff Bezos, it looked as if the Enquirer scored an early, decisive victory. They broke a huge story about the richest man in the world having an affair with the wife of one of the most powerful men in Hollywood. But ultimately, Bezos won on the PR front. In the popular imagination, the story of the tech mogul and the tabloid got blurry. To the extent that people remember it at all, it's with a lot of confusion. Were the Saudis involved? Trump the brother? That's why Craig still marvels at how Bezos managed to pull off this victory against a news publication.

[Craig Berman]

He certainly did defeat in spectacular fashion, an outlet that was really, really coming after him hard. It was a defeat that most public figures lose. In our business of communications and public relations, you don't answer the door when Mike Wallace knocks. And if the Inquirer has something, it's probably true most people don't survive those.

[Brad Stone]

So Bezos won. But what about his company? Remember, he spent 20 years building an image within Amazon as a family man. And now their CEO was in an entirely different orbit of celebrity and notoriety. Tabloid newspapers and websites would follow his every move with his new girlfriend by his side. He'd show up courtside at Wimbledon, at the super bowl in Miami, even in the DJ booth of a popular nightclub. Bezos was enjoying this a lot. He seemed to love flaunting his new relationship with Lauren and together indulging in the trappings of exorbitant wealth. And that was going to be a problem for the CEO of Amazon. Modesty and frugality were important values at the company, even more so with antitrust authorities investigating its growing population power the CEO image that Bezos had spent two decades cultivating of a devoted family man and committed husband was a thing of the past. In a sense, his personal life had become incompatible with his professional responsibilities. He had a choice to make, and it would be a historic one. Here's Craig again.

[Craig Berman]

I think he does have a level of self awareness to kind of understand what the impacts of those things are, and I think that may be what may have ultimately contributed to him stepping.

[Brad Stone]

Away from the CEO role, Bezos resignation, and his blast off into space on a blue origin rocket. That's coming up in the next and final episode of Foundering the Amazon Story. Foundering is hosted by me, Brad Stone, Sean Wen is our executive producer. Ray Mondo is our audio engineer. Molly Nugent is our associate producer. Mark Million, Ann Vanderme, Robin Agello and Molly Schutz are our story editors. Special thanks to Mark Bergen. Francesca Levy is the head of Blue Bloomberg Podcasts. Be sure to subscribe and if you like our show, leave a review. Most importantly, tell your friends. See you next time.

[Michael Sanchez]

Feeling buried in the never ending to do list that comes with running a business. Managing orders, tracking expenses. It's a lot. That's where Amazon Business steps in. They've got smart buying solutions like Spend Visibility, a cloud based system to track your buying patterns so you can optimize your savings and bulk buying so you can continue to save costs on select products with quantity discounts. Smart, right? Let Amazon Business take care of the admin so you can focus on what really matters growing your business. Check out Smart business [e-mail] a business.

[Brad Stone]

Prime membership is required to access Spend Visibility.

[Michael Sanchez]

This podcast is supported by BetterHelp, offering licensed therapists you can connect with via video phone or chat. Here's BetterHelp head of clinical Operations Hes Yu Jo discussing who can benefit from therapy.

[Brad Stone]

I think a lot of people think that you're supposed to be going to therapy once you're like having panic attacks every day. But before you get to that point, I think once you start even noticing that you feel a little bit off and you can't maintain this harmony that you once had in relationships, that could be a sign that maybe you want to go talk to somebody. There's always a benefit in talking to someone because we can all benefit from improved insight about ourselves and who we are and how we behave with other people. So if you're human, that's like a good indicator that you could benefit from talking to somebody.

[Michael Sanchez]

Find out if therapy is right for you, visit betterhelp.com today. That's betterhelp.com.