Peter Thiel just gave other billionaires a dangerous blueprint for perverting philanthropy

Funding Hulk Hogan’s lawsuit against Gawker? That’s not cool. Actively going out to find potential plaintiffs who might have cases against Gawker and then giving them the money to bring those cases? Even that’s not cool.

You know what’s cool? Reinventing the concept of philanthropy so as to include weapons-grade attacks on America’s free press, and doing so from the very heart of The New Establishment.

This is the big story, which a lot of people are missing about the news that Peter Thiel secretly funded a series of lawsuits against Gawker: the Facebook board member and Silicon Valley demigod just gave the world a master class in how a billionaire can achieve enormous ends with a relatively modest investment. That’s a lesson many of his friends are eager to be taught—not least his protégé, Mark Zuckerberg, who is just beginning to try to reinvent philanthropy for the 21st Century.

Thiel’s interview with the New York Times about his legal campaign, in which a $10 million investment on lawyers managed to bring an entire media company to the brink of disaster, is the new required reading in Silicon Valley, especially the bit where he says that it’s “one of my greater philanthropic things that I’ve done.”

Thiel, like most Silicon Valley entrepreneurs, loves to think of himself as a visionary. His first company, PayPal, started as an attempt to create a whole new global currency; since then he has invested most of his time and money into ambitious attempts to change the world. But it’s his investment in a campaign against Gawker, intended to inflict as much damage as he can on Gawker Media and its proprietor, Nick Denton, which could prove to be his most effective – and his most harmful.

Thiel’s tactics in going after Gawker are very, very frightening for anybody who believes in freedom of speech; they’re also extremely effective, in an evil-genius kind of way.

Historically, news publications have treated certain subjects very carefully: if you’re rich and known to be litigious, then there’s a good chance that news organizations will have lawyers do a careful review of anything they write about you before they publish it. That’s the main way that they protect themselves from the destructive potential of lawsuits being brought against them.

But Thiel has just upped the stakes. Back in 2006, he promised that he would rain destruction on Denton and his associates if Gawker ever outed him as being gay, which they did, the following year. But he didn’t sue Gawker over the articles that they wrote about him. Instead, he just sat, and waited, and waited, for years, as Gawker published thousands and thousands of articles about thousands and thousands of people, most of whom were entirely unrelated to Thiel.

Gawker is a fast-moving site; it can’t (and doesn’t) carefully lawyer every single thing it publishes. No one can. And so Thiel knew that, if he just had patience, eventually he’d be able to seize his chance, and make good on his threats. He hired a legal team, told them to look for promising cases, and then started funding them with millions of dollars.

Thus did Thiel end up bankrolling the hugely expensive Hulk Hogan case against Gawker, along with an unknown number of others. And thus did the Hogan case become an attempt to bring a media organization to its knees, more than it was an attempt to deliver justice for Hulk Hogan himself.

Hogan could have accepted a substantial financial settlement; he could also have made it much more likely that he would get paid, by suing in such a manner as to make Gawker’s insurance company liable for any verdict. Instead, he refused all settlements, and withdrew the insurable complaints, to ensure that the company itself would incur as much damage as possible.

The next step, after the Hogan verdict, was for Thiel to go public. After the enormous damages were announced and the long appeals process creaked into action, it started to become obvious that Gawker would need to raise more capital in order to continue to be able to fight the case. (In the worst case scenario, it would need to put up a $50 million bond.) Gawker had already sold some new stock in January; there was talk of doing the same thing again. With cash, Gawker could fight the Hogan verdict, get it reduced or even thrown out entirely, and carry on as a going concern.

But then the Thiel bombshell dropped. The Hogan case, it turned out, wasn’t a war in which Gawker could emerge victorious; instead, it was merely a battle in a much larger fight against an opponent with effectively unlimited resources.

Gawker could continue to fight the Hogan case; it could even win that case outright, on appeal. But even if Hogan went away, Thiel would not. Thiel’s lawsuits would not end, and Thiel’s pockets are deeper than Denton’s. Gawker’s future is indeed grim: it can’t afford to fight an indefinite number of lawsuits, since fighting even frivolous suits is an expensive game.

The result is that investing in Gawker right now is a very unattractive proposition, since any investor knows that they will be fighting a years-long battle with a single-minded billionaire who doesn’t care about how much money he spends on the fight. And if Gawker can’t raise any new money to continue to fight the Hogan case, then its corporate end might be closer than anybody thinks. The company’s money-spinning sites like Gizmodo and Lifehacker will live on, somehow: they have value to potential purchasers, and are assets which can be sold in satisfaction of a financial judgment. But Gawker Media, the unique and fearless media organization led by Nick Denton, is truly staring down an existential threat, with no obvious way out.

It gets worse. If Thiel’s strategy works against Gawker, it could be used by any billionaire against any media organization. Sheldon Adelson, Donald Trump, the list goes on and on. Up until now, they’ve mostly been content suing news organizations as plaintiffs, over stories which name them. But Thiel has shown them how to go thermonuclear: bankroll other lawsuits, as many as it takes, and bankrupt the news organization that way. Very few companies have the legal wherewithal to withstand such a barrage.

Thiel, by funding Hulk Hogan, has managed to change the world. He has made the lives of all news organizations much more precarious, and he has created a whole new weapon which can be used by any evil billionaire against any publisher. And the whole thing cost him merely $10 million or so. Quite a return on invested capital!

Let’s be clear: Thiel’s $10 million (or however much it was) is not philanthropic money. It’s despicable for him to say that it is. But he certainly has his friend Mark Zuckerberg’s ear, and this is undoubtedly a compelling example of how it is possible to leverage a vast fortune to change the world, even while spending relatively little of it.

One can only hope that Zuckerberg’s motivations, and those of his wife Priscilla, are more noble than Thiel’s. Because Zuckerberg has pledged to spend almost all of his fortune on trying to change the world, and is open to spending it in non-tax-deductible ways if those have a greater effect. If Zuckerberg agrees with Thiel that this kind of activity is noble and philanthropic, then the Chan Zuckerberg Initiative could wreak enormous damage on the world.

Thiel sits on Facebook’s board, alongside Silicon Valley mega-investor Marc Andreessen. If he remains there, after these latest revelations, that’s a clear sign that Zuckerberg places great stock in how Thiel thinks and acts. And that is worrying not only in terms of Facebook’s future, but also for what the world can expect to see from the Chan Zuckerberg Initiative, and other likeminded philanthropic ventures.

Silicon Valley has always had its fair share of large egos. But until now, they haven’t generally had the stated aim of using their personal money to wage scorched-earth campaigns against private media organizations. If Thiel succeeds in having such wars accepted as worthy philanthropy, we should all be very afraid.