Tech
Israeli justice reforms spark tech investor flight fears
Barak Eilam, a former Israeli intelligence officer who now heads cloud-based software provider NICE (NICE.TA), says he has never had problems selling Israel as an investment destination.
But on a call last week, Eilam sensed this may be changing when major investors he had partnered with for years began asking pointed questions about a radical judicial overhaul.
“For now, they re not pulling out any investment but they are kind of watching it carefully,” the 47-year-old said.
The proposals by the new right wing government of Prime Minister Benjamin Netanyahu to strengthen political control over judicial appointments while weakening the Israeli Supreme Court s ability to overturn legislation or rule against government action have brought tens of thousands onto the streets of Tel Aviv and other cities over fears they will politicize the judiciary and compromise its independence.
Yoav Tzruya, general partner at venture capital fund JVP, said investors were mainly worried about stability, corruption and a reliable judicial system.
“I think there will be some investors that, given concerns about stability about corruption or whatever might put more hurdles in front of especially a new fund manager,” he said.
Earlier this week, an open letter from a group of more than 270 business and economy experts, including former central bank officials and Netanyahu advisers, said the judicial reforms represented “a danger to Israel s economy”.
Netanyahu s office did not immediately comment when approached by Reuters on Friday, but during a meeting with dozens of senior businessmen, he said the judicial reforms would boost growth while the legal system would remain independent.
“Not only will the reform not harm the economy, it will jumpstart it,” he said in a statement.
For Israel s tech companies, an independent legal system is crucial to protecting their main asset, intellectual property (IP), with some executives saying they may consider domiciling abroad as a result of the Netanyahu government s plans.
On Thursday, a day after Netanyahu and Finance Minister Bezalel Smotrich dismissed concerns that the proposals would harm the economy, Anat Guez CEO of Papaya Global announced she was taking her payroll systems group s money out of Israel.
“Everybody knows Israel is never on safe ground because of the complicated diplomatic issues,” Guez told Reuters. “But now we re adding this reform which is ultimately emerging as harming democracy, that s a fatal blow.”
Netanyahu s administration says the overhaul is needed to rein in activist judges who it says have encroached into political decision making.
“Nobody will harm intellectual property rights and the honoring of agreements, values which are sacred to us and which are the critical test,” Netanyahu said on Wednesday.
Hillel Fuld, a start-up marketing adviser, also dismissed the outcry as “unnecessary hysteria”.
“We are still building the best tech in the world. Israeli tech isn t going anywhere. If people pull money then it s their loss, not ours”, he said.
OpenAI and Japanese conglomerate SoftBank (9984.T) will each commit $19 billion to fund Stargate, a joint venture to develop data centers for artificial intelligence in the U.S., the Information reported on Wednesday.
The ChatGPT maker will hold a 40% interest in Stargate, and would act as an extension of OpenAI, the report said, citing OpenAI CEO Sam Altman speaking to colleagues. His comments imply SoftBank would also have a 40% interest, the report added.
OpenAI and SoftBank did not immediately respond to Reuters’ requests for comment.
On Tuesday, U.S. President Donald Trump announced that OpenAI, SoftBank Group and Oracle (ORCL.N) will unveil Stargate and invest $500 billion over the next four years to help the United States stay ahead of China and other rivals in the global AI race.
Stargate will initially deploy $100 billion and the rest of the funding is expected over the next four years. The project is being led by SoftBank and OpenAI.
Taiwan’s HTC (2498.TW) said on Thursday it will sell part of its unit for extended reality (XR) headsets and glasses to Google (GOOGL.O) for $250 million and transfer some of its employees to the U.S. company.
The transaction is expected to close in the first quarter of this year, HTC said.
The two companies will also explore further collaboration opportunities, HTC added.
Google said in a separate statement that the deal will accelerate the development of the Android XR platform and strengthen the ecosystem for headsets and glasses.
Lu Chia-te, HTC vice president and general counsel, told reporters the company had granted its intellectual property rights to Google as a non-exclusive license.
“Therefore, this is not a buyout nor an exclusive licence. In the future, HTC will still retain the ability to use, utilise, and even further develop it without any restrictions,” he said.
Microsoft’s (MSFT.O) LinkedIn has been sued by Premium customers who said the business-focused social media platform disclosed their private messages to third parties without permission to train generative artificial intelligence models.
According to a proposed class action filed on Tuesday night on behalf of millions of LinkedIn Premium customers, LinkedIn quietly introduced a privacy setting last August that let users enable or disable the sharing of their personal data.
Customers said LinkedIn then discreetly updated its privacy policy on Sept. 18 to say data could be used to train AI models, and in a “frequently asked questions” hyperlink said opting out “does not affect training that has already taken place.”
This attempt to “cover its tracks” suggests LinkedIn was fully aware it violated customers’ privacy and its promise to use personal data only to support and improve its platform, in order to minimize public scrutiny and legal fallout, the complaint said.
The lawsuit was filed in the San Jose, California, federal court on behalf of LinkedIn Premium customers who sent or received InMail messages, and whose private information was disclosed to third parties for AI training before Sept. 18.
It seeks unspecified damages for breach of contract and violations of California’s unfair competition law, and $1,000 per person for violations of the federal Stored Communications Act.
A lawyer for Prince Harry on Wednesday said the Duke of Sussex had reached a settlement with Rupert Murdoch’s news conglomerate.
LinkedIn said in a statement: “These are false claims with no merit.”
A lawyer for the plaintiffs had no immediate additional comment.
The lawsuit was filed several hours after U.S. President Donald Trump announced a joint venture among Microsoft-backed OpenAI, Oracle (ORCL.N) and SoftBank (9984.T), with a potential $500 billion of investment, to build AI infrastructure in the United States.
OpenAI, SoftBank each commit 19bn dollars to Stargate AI data center
Taiwan’s HTC to sell part of XR unit to Google for 250mn dollars
Microsoft’s LinkedIn sued for disclosing customer information to train AI models
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