AMZN Amazon.com Inc

By Justin Scheck in New York, Bradley Hope in London and Summer Said in Dubai 

Through much of 2018, Amazon.com Inc. founder Jeff Bezos and tech-savvy Saudi Crown Prince Mohammed bin Salman seemed to be hitting it off.

Texting over WhatsApp about a plan for Amazon to build a huge data center in Saudi Arabia, the men forged a cordial and mutually beneficial relationship. "It is very important for me, my friend, that you come to Saudi during the future investment Forum and we announce this $2.8B Vision 2030 partnership," the prince messaged Mr. Bezos on Sept. 9, 2018, according to a review of texts by The Wall Street Journal and people familiar with the situation.

Amazon stood to gain broader access to the Middle Eastern market. Prince Mohammed could be aided in his efforts to reform the Saudi economy as well as burnish his personal brand.

Now, one of the world's richest men and one of the most powerful princes are archenemies, each accusing the other of betrayal.

Over the course of 2018, Prince Mohammed grew frustrated as the Bezos-owned Washington Post published critical columns by Saudi dissident Jamal Khashoggi, according to people familiar with the matter. Mr. Bezos was deeply disturbed after men working for the prince murdered Mr. Khashoggi that October, said people familiar with the situation.

But the feud didn't erupt into a public spectacle until last week, with the surfacing of a report commissioned by Mr. Bezos that said -- with "medium-to-high confidence" -- that Prince Mohammed had installed spyware on Mr. Bezos' phone via a WhatsApp message in May 2018.

The Saudi government denies that the prince hacked Mr. Bezos' phone. The Journal has reported that Saudi officials close to the crown prince said they were aware of a plan to compromise Mr. Bezos' phone, though not that an attack actually happened.

William Isaacson, a lawyer for Mr. Bezos, declined to comment for this article, as did representatives for the Saudi government in Riyadh and Washington. An Amazon spokesman declined to comment on details of the data-center plan.

Later in 2018, the National Enquirer received embarrassing texts and photos of the then-married Mr. Bezos and his girlfriend, Lauren Sanchez, and published some of them in January 2019. Mr. Bezos has said there was Saudi involvement in the matter, an assertion the Enquirer and the Saudi government disputed.

The Journal has reported that the Enquirer paid $200,000 to buy the racy texts and photos from Ms. Sanchez's brother Michael Sanchez, according to people familiar with the matter, and that federal prosecutors have evidence indicating Ms. Sanchez had given him the material.

Ms. Sanchez hasn't responded to requests for comment. Mr. Sanchez said in an emailed statement: "With spoon-fed lies and half-truths, Wall Street Journal keeps getting it wrong."

It is a remarkable show of public animosity between two men who seemed to have aligned interests when they met in 2016.

Prince Mohammed had taken over efforts to remake the Saudi economy, a position he gained after his father, Salman, became king in 2015. The prince told friends and acquaintances that he sees himself in the mold of tech-company founders like Steve Jobs and Mr. Bezos -- men who built business empires through visionary leadership and supreme self confidence.

For several years, Prince Mohammed has met with investors, money managers and chief executives to explain his vision. Among his big initiatives was a $500 billion tech-focused city called NEOM that he planned to build along the Red Sea.

In confidential planning documents the Journal reviewed, consultants for the Saudi government outlined "tailor-made incentives" to woo Amazon as a major part of the project, including government funding and 99 years of free rent.

Many Western business leaders wanted the prince to invest Saudi money in their operations, people familiar with the meetings said. Amazon was one of the few willing to invest a large amount of money in Saudi Arabia. The data center would serve Amazon customers across the region, according to people in the Gulf and the U.S. familiar with the talks.

The two men had an April 2018 dinner in Los Angeles during a U.S. tour the prince made. For Prince Mohammed, it would be among the first major investments in the kingdom by a Western tech company, and one of the first times a big foreign company would chose Saudi Arabia, rather than traditionally business-friendly locations like Dubai or Abu Dhabi, as a Mideast hub.

The details were negotiated by lower-level teams. But the prince and Mr. Bezos kept in touch about the project on a high level over WhatsApp, people familiar with the project said.

WhatsApp was a key tool of the young prince's global charm campaign. In his first few years as crown prince, he handed out his WhatsApp contact information to visiting dignitaries, businessmen, academics and some journalists so often that his phone streamed messages day and night, people who interacted with the prince said.

Prince Mohammed would go through the messages every day, those people said. Receiving a response was a surprise for Americans accustomed to doing business in the Gulf, where senior princes were typically aloof.

Talks about a data-center project that could cost $2 billion or more were under way when Prince Mohammed and Mr. Bezos began communicating over WhatsApp in spring 2018, the people familiar with the matter said. Saudi officials believed Amazon was willing to commit up to $4 billion to the project, said people involved in the talks.

Yet the prince at points griped to Mr. Bezos about Amazon's earlier business decisions in the region -- it had bought an e-commerce company in 2017 that competed with a business co-owned by the Saudi sovereign-wealth fund, and announced a deal to build a data center in neighboring Bahrain.

"I was very disappointed" to hear about the Bahrain deal, the prince texted Mr. Bezos, according to the people familiar with the exchanges. He wrote that Amazon's decision not to partner with Saudi Arabia from the get-go "has pushed" Saudi Arabia to compete in e-commerce with Amazon.

Still, the prince continued to send enthusiastic messages through the summer of 2018 about Amazon's eventual arrival in the kingdom, these people said.

It turns out the prince's messages to Mr. Bezos were somewhat misleading.

Prince Mohammed's security adviser, Musaid al Aiban, had already frozen the data-center deal because Amazon.com wouldn't allow Saudi intelligence and law enforcement access to the data as part of the discussions, people familiar with the matter said.

On April 17, 2018, less than two weeks after the prince and the CEO had dinner in Los Angeles, Mr. Aiban told officials working on the deal not to complete it -- and also not to tell Amazon it was being held up. Prince Mohammed was apprised of this strategy, according to these officials.

"Never say no publicly. We just keep stalling and cite bureaucratic delays," said an adviser for the government who worked on the project.

Multiple efforts to reach Mr. Aiban through media representatives of the Saudi government were unsuccessful.

It was important not to alienate Mr. Bezos because Prince Mohammed wanted him to attend the Riyadh financial conference later in the year. Nicknamed "Davos in the Desert," it was the prince's opportunity to trumpet, domestically and abroad, his alliances with the world's business and technology leaders.

Through the summer of 2018, the prince encouraged Mr. Bezos to come to the October conference, text messages show. It isn't clear whether Mr. Bezos ever formally committed to attending.

Then, on Oct. 2, 2018, Mr. Khashoggi, the Washington Post columnist, entered the Saudi embassy in Istanbul and never emerged. The Post wrote a number of investigative articles and editorials about the murder, many blaming Prince Mohammed.

For days, Saudi Arabia issued statements denying involvement only to be contradicted by information gathered by Turkey, partially through recordings inside the Saudi embassy, that indicated Mr. Khashoggi was killed by Saudi operatives.

Later that month, Saudi Arabia said officials of its government killed Mr. Khashoggi in a rogue operation, and tried to dampen international outrage by announcing its own investigation. The Central Intelligence Agency concluded that the killing was carried out under the prince's orders, U.S. officials said. Saudi Arabia has denied the prince had any prior knowledge.

In the aftermath of the Khashoggi killing, government officials and executives from around the world pulled out of the Riyadh conference, including Mr. Bezos.

Around that time, National Enquirer employees got a tip about Mr. Bezos' affair and began tailing him, the Journal has reported. In January 2019, Mr. Bezos revealed he was getting divorced, knowing that the Enquirer was ready to publish an article about his affair. The Enquirer subsequently threatened to publish more racy texts and photos unless Mr. Bezos publicly said he had no evidence the tabloid had targeted him for political reasons.

Mr. Bezos refused the Enquirer's demand.

It wasn't until last Wednesday that details of the alleged Saudi hack of Mr. Bezos' iPhone became public, after United Nations officials called for an investigation of the incident and summarized the report by Mr. Bezos' consultants.

The consultant's report has spurred questions among cybersecurity experts, who said it relied heavily on circumstantial evidence to make the case that a WhatsApp account associated with Prince Mohammed was probably used to hack into Mr. Bezos' phone.

The consultants weren't able to figure out if information from Mr. Bezos's phone was linked to the photos and texts that ended up with the Enquirer.

Write to Justin Scheck at justin.scheck@wsj.com, Bradley Hope at bradley.hope@wsj.com and Summer Said at summer.said@wsj.com

(END) Dow Jones Newswires

January 26, 2020 20:29 ET (01:29 GMT)

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