SoftBank picking its battles with US national security committee

on Apr13
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The logo of Japanese mobile provider SoftBank is displayed at an entrance of a shop in Tokyo's shopping district Ginza.

Kazuhiro Nogi | AFP | Getty Images

The logo of Japanese mobile provider SoftBank is displayed at an entrance of a shop in Tokyo’s shopping district Ginza.

SoftBank has agreed to give up board seats and access to sensitive information, take a more passive role in startups and make other concessions to get government clearance for its technology deals in the United States.

These maneuvers come as the Japanese investor confronts a new U.S. law aimed at cracking down on foreign investors.

SoftBank’s investment style has made it a frequent visitor of a U.S. government group known as the Committee on Foreign Investment in the United States (CFIUS), charged with reviewing foreign investment for national security and competitive risks.

“We know the deals are going to be reviewed,” Marcelo Claure, chief operating officer of SoftBank, said in an interview with Reuters this week. “We have abided by what the U.S. government wants.”

SoftBank likes to take large stakes in companies working on artificial intelligence, data analytics, financial services and self-driving cars – technologies increasingly viewed as critical to national security. This puts them in the crosshairs of a law signed by U.S. President Donald Trump last year expanding the powers of CFIUS.

Giving up board seats and access to private information would make SoftBank less of a threat in the eyes of CFIUS, giving its deals a better chance of approval.

“We would not accept this if we were in the business of running companies,” Claure said of the concessions. “We’re not. We are in the business of investing.”

Claure declined to provide specifics on investments where SoftBank has had to make concessions or give up board seats and the U.S. government does not comment on CFIUS reviews.

The regulations have deterred many foreign investors from even attempting investment in U.S. tech companies.

“Everything is a conversation with the government so you figure you are going to pick your battles,” Claure said.



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