Softbank, the Japanese bank, has reportedly given up on a $100 million investment in a smartphone startup in part because of Softbank’s growing relationship with Apple.
According to a report in The Wall Street Journal citing people familiar with the matter, Softbank was gearing up to invest in Essential Products, a startup that was founded by the creator of the Android software Andy Rubin. Softbank Chief Executive Masayoshi Son pledged Softbank’s telecom unit in Japan would invest in the startup and give Essential a big marketing push for the launch of its high-end smartphone, which is coming out in the spring ahead of the launch of Apple’s iPhone 8, which is slated for a fall release.
Apple is an investor in Softbank’s new $100 billon technology fund dubbed Vision Fund. In January Apple agreed to invest $1 billion in the fund, and while Apple didn’t prevent the investment in Essential, the fact that it’s investing in the tech fund did complicate matters, reported the WSJ. After all, the phone being launched by Essential is going after Apple and Samsung on the high-end side of the smartphone market, rolling out a sleek-looking phone that is priced in line with the iPhone and the Samsung S series of devices. Rubin has even hired some of Apple’s employees, noted the report, with product designers, engineers and a hardware program manager coming on board. The paper noted in February, after months of talks when final investment contracts were being crafted, Son decided to walk away from the deal.
The Vision Fund is a partnership between Softbank and the Public Investment Fund of the Kingdom of Saudi Arabia. Of the $100 billion target, those two partners would chip in $70 billion through the next five years and look for $30 billion to come from outside investors, including Apple.