Peter Thiel vs. Gawker: The Flame War’s Logical Conclusion

What the billionaire’s financing of lawsuits against the gossip rag says about Internet culture

Peter Thiel (Gus Ruelas / Reuters)

What could be stranger than a former professional wrestler winning an eight-figure jury award in a lawsuit against an online gossip site that distributed his sex tape? If the lawsuit also had been secretly funded by a technology billionaire. It sounds like something out of a pulpy television script, but, nope, apparently it’s the sort of thing that really happens now.

This week, The New York Times reported that Gawker Media founder Nick Denton suspected that someone connected to Silicon Valley might have been financing Hulk Hogan (Terry Bollea)’s defamation lawsuit against his company, which obtained and published the wrestler’s sex tape in 2012. Citing an anonymous source, Forbes named PayPal founder and early Facebook investor Peter Thiel as the Silicon Valley figure in question. Yesterday, Thiel confirmed to the Times that he did indeed support the Bollea lawsuit—along with those of other Gawker “victims.”

Thiel wears many hats, among them venture capitalist, entrepreneur, hedge fund manager, and Trump-supporting technolibertarian. He’s invested in the singularity, in anti-aging research, in libertarian utopias at sea, and in a fellowship program encouraging young people to launch startups rather than attend college.

The situation is disconcerting. Entrepreneur, technology personality, Internet dad, and Prince fan Anil Dash compared Thiel’s underwriting of the Hogan lawsuit to James Bond villainy—a potentially apt characterization, given Thiel’s interest in a man-made offshore libertarian paradise. And also because the motivation for his intervention appears unhinged rather than savvy. Thiel has a longstanding feud with Gawker, whose eponymous gossip site outed him as a gay man, and whose former Silicon Valley rag Valleywag he once compared to a terrorist organization.

Litigation finance—funding another party’s civil lawsuit—isn’t illegal, even if, in this case, it does seem slimy. But normally, such arrangements are made strictly for business. As Mattathias Schwartz reported for The New York Times last year, it’s become increasingly common for investors to “buy shares” in litigation. For the litigant, selling a part of a potentially lucrative lawsuit can help offset the high upfront costs of the litigation and reduce some of its associated risk. And for the investor, the litigation becomes akin to any other security—as Schwartz puts it, “lawsuits are making a transition from a private arrangement to a fully monetized asset class.”

Investors also fund lawsuits for strategic reasons. A litigation can set precedent in an industry, create or alter public perception of an issue, and financially rout a successfully litigated company. Such turns of fortune give litigation investment a secondary benefit for hedge funds and other aggregators of securities, which might have other investments that would benefit from a desirable outcome in a particular case.

But Thiel didn’t bankroll Hogan’s case against Gawker for financial gain. Hogan’s legal team dropped one of its claims, which would have allowed Gawker’s insurance to cover its settlement and legal costs. And absent a settlement, the case could take years of appeals to resolve. A litigation investor would be unlikely to facilitate a maneuver that would reduce or delay the payment of damages. Meanwhile, there’s limited strategic reason for a tech billionaire like Thiel to target Gawker Media—Valleywag closed in 2015, and Gawker is little more than a nuisance for Thiel. All the more reason to take Thiel’s motives as Bond-villain rationales rather than logical ones: a vendetta rather than a venture.

None of this would be terribly remarkable in the world of banks, billionaires, and other bastions of egomania. Certainly hedge fund managers are just as likely, if not more so, to unleash tempers and realize grudges. But once those tempers and grudges move out to Silicon Valley, a surprising revelation surfaces: If anything, someone like Thiel funding a lawsuit just to “disrupt” a news site he hates feels more like the kind of abuse associated with Internet trolling than it does like hedge fund opportunism.

The everyperson’s capacity to taunt and intimidate was once limited to his or her immediate vicinity, but no longer. Take the scourge of online harassment. The Atlantic’s Adrienne LaFrance recently covered the impact of online abuse on women in particular. LaFrance acknowledged that both men and women endure abuse online, particularly on public platforms like Twitter, but women appear to suffer more frequent, more intense, and more dangerous abuse—including extreme cases like doxxing, in which a target’s private information is published online, or swatting, in which that information is used to incite a fraudulent law enforcement raid on a target’s home or business. For her trouble, LaFrance was subject to the usual fusillade of nasty tweets, along with the expected rancor in the article’s comments.

It’s the “usual” and “expected” that’s notable here. “So what?” you might ask. “That’s just life on the Internet.” And it is. But the fact that it got to be thus is notable yet not frequently enough noted. There have always been narcissists, spreading their rancor as far as their arms and voices allow. But online, everyone is a narcissist. Thiel’s vengeance is not that much different from our own, workaday version—he just has a lot more money to spend on it.

Media coverage of Thiel’s bankrolling of Hogan’s lawsuit seems to want to suggest that such meddling in the law and the media comes at the cost of knowledge and of liberty. It’s ironic given Thiel’s espoused libertarianism, and it’s timely given the ongoing controversy over Thiel-invested Facebook’s role in manipulating the appearance of news on its site, and Donald Trump’s potential to suppress the press if elected.

To be sure, it’s an insidious turn for the public forum, even if it’s a legal one. But if Thiel were a Bond villain, he’d be the nerdy underdog rather than the sociopathic power-lord. Boris Grishenko, not Ernst Stavro Blofeld. “It’s less about revenge and more about specific deterrence,” Thiel told the Times. “I saw Gawker pioneer a unique and incredibly damaging way of getting attention by bullying people even when there was no connection with the public interest.” It’s the kind of sentiment you might hear on Reddit or 4chan as a justification for a vigilante operation. Thiel even demurs, assuring the Times that “I didn’t really want to do anything” before finally concluding, if not him then who? It’s the favorite rationale of the lone vigilante.

But Thiel’s trespass doesn’t make Gawker a martyr, either. There are no winners in this dispute. Is Gawker any more virtuous for casting their tabloid publication of Hogan’s sex tape as journalism in the public interest—or outing Thiel—than Thiel is in underwriting their comeuppance for it? We can debate the details, but “virtue” probably won’t enter the conversation. And even debating the details entails the tacit acceptance of attention’s victory over knowledge in today’s media ecosystem. It’s not just tabloid editors and billionaires; everyone is scrambling to make their voices louder than everyone else’s. The loudest, it turns out, get to be right.

Ordinary folk once used ordinariness as a clarion call to basic virtue. Unlike hedge fund managers and billionaires, at least your friend or your neighbor or some random guy would observe some modicum of respect and dignity for a fellow friend or neighbor or rando. But, alas, the internet has proven us all to be just as likely to be as vicious as someone with far more power, influence, and weath. The whole Thiel affair might appear to prove a sordid lesson about the lengths a supposedly libertarian, Trump-supporting tech billionaire will go to exact revenge, or to express his inflated ego in defense of the inalienable righteousness of the technology industry. But instead, it mostly serves as a reminder that the tech industry’s wares have made it normal, and expected, for anyone to do so.