What’s the Deal with Son and Trump?

President-elect Trump got plenty of headlines out of his recent meeting with Softbank president Masayoshi Son, boasting afterwards:

“Masa, a great guy of Japan, he’s pledged that he’s going to put $50 billion into the United States because of our victory. He wasn’t investing in our country — $50 billion. Fifty thousand jobs — 50,000 jobs he’s going to be investing in. He is a great guy.”
Donald Trump, in Fayetteville, N.C., 2016-12-06

Clearly, Trump is hoping to get some mileage out of this meeting with Son, but what’s in it for Softbank? Why is he meeting up with the next president and not just with business leaders?

It’s unlikely the surprise victory for Trump was much of a factor in the announced investment plans. Three weeks before the election, when most pundits were still expecting a Clinton victory, Softbank already announced it was setting up a $100 billion dollar investment fund, with Saudi Arabia supplying the biggest share of the funds. Given the size of it and the special role the US plays for technology startups, it is unlikely most of it wasn’t meant to be invested there anyway. So take any claims that Son will be investing in the US only because Trump won with more than a pinch of salt.

Softbank already made a huge investment in the US under Trump’s predecessor, President Obama. In 2013 Softbank acquired US mobile carrier Sprint for $22 billion. However, its plans to acquire smaller carrier T-Mobile were thwarted by the FCC. And this is the likely background for the recent meeting and announcement:

Analysts said Son may be seeking to improve the chances of a merger between Sprint and T-Mobile. Sprint and SoftBank abandoned an effort to buy T-Mobile in 2014 after the Federal Communications Commission signaled the deal might violate antitrust laws.

Trump will be responsible for appointing the next FCC chairman. Speaking from the lobby of the Trump Tower on Tuesday, Son said that he wanted to celebrate Trump’s election “because he would do a lot of deregulation.”

“SoftBank’s original plan may come true with the new FCC chairman,” Naoshi Nema, analyst at Cantor Fitzgerald, said in a note.
The SoftBank investment Trump touted looks pretty great for SoftBank (LA Times, 2016-12-07)

By flattering Trump’s ego, Son is hoping to gain political influence to pull off a plan that was shot down by the FCC because it would be bad for competition and bad for consumers. With fewer players in the market, mobile plans will go up in price. Most likely a merger of Sprint and T-Mobile would would also lead to “synergies” (aka layoffs) as the companies would share infrastructure and other resources. Sprint already laid off thousands of employees to save billions of dollars under Softbank. But never mind reality when headlines of “50,000 new jobs” sound much better! 😉

This is not how a market economy should work in a country operating under the rule of law. Trump has not even taken office yet and the US is already starting to look like a Third World country, where the key to doing well in business is to cozy up to the president.

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