You are using an outdated browser.
Please upgrade your browser
and improve your visit to our site.
Skip Navigation

Amazon’s Hostile Takeover

How the online behemoth could turn Washington, D.C., into a different kind of company town

David McNew/Getty Images

Amazon is in a strange place in 2018. On the one hand, it is well on its way to world domination. It remains, even amid a growing “techlash,” one of the most popular companies in the country. On the other, it has found itself in the crosshairs of the president of the United States, who was able to (temporarily) shave off hundreds of millions of dollars in Amazon’s market value with a weeklong barrage of tweets earlier this month. Its dominance, moreover, has become a vulnerability. An emerging bipartisan cohort in Washington, D.C., has made it clear that Big Tech’s long honeymoon with regulators and politicians is coming to an end.

Amazon has prepared for this turbulence. It has, over the last five years, stepped up its lobbying efforts in Washington. In February, Bloomberg reported that the company had “increased lobbying spending by more than 400 percent,” outpacing all of its rivals. Its efforts to influence lawmakers now essentially match those of Google.

Amazon’s American Idol-ish pursuit of a second headquarters can be seen as an extension of its lobbying efforts. Amazon has been labeled a job-destroyer, its low prices driving manufacturers, mom-and-pop stores, and retail chains like Borders and Toys ‘R’ Us out of business. By opening up bids for its second headquarters to cities and municipalities across the country, Amazon is countering that narrative: For only a few billion dollars in tax breaks, the lucky winner would get 50,000 jobs.

But there might be another element to these sweepstakes: Amazon may ultimately try to further influence the government by awarding its HQ2 to Washington, D.C. Such a move would send an unmistakable signal: After conquering Silicon Valley, Washington is next.

Washington is, with Boston trailing close behind, widely seen as the frontrunner to be the site of HQ2. Three of the 20 finalists on Amazon’s shortlist are in the D.C. area: the city proper, Maryland’s Montgomery County, and the more nebulous “Northern Virginia.” Some have suggested that Amazon is seeking to create a situation where these three areas bid against each other. But it’s also possible that Amazon could end up choosing multiple locations—building a headquarters in Washington itself, with another complex (or several) in the surrounding metro area.

Amazon has been investing in the area for some time. Amazon Web Services, the company’s mega-profitable cloud computing arm, announced it would be building a campus in Virginia’s Loudon County last year. CEO Jeff Bezos bought The Washington Post five years ago, and has bought a 27,000-square-foot mansion in D.C., which he has spent millions renovating. The region checks off most of the boxes that Amazon is looking for: It has good public transportation, some of the best museums in the country, a progressive political climate, and elite schools and universities.

Every tech company has increased political spending over the last few years, and the amount of tech money circulating in D.C. will skyrocket now that Facebook CEO Mark Zuckerberg has been hauled before Congress to answer questions about the myriad ways in which his company is harming America and the world. But dropping anchor in D.C. would be a major escalation—not just for tech, but for any industry. While other companies, like Capital One and Lockheed Martin, have headquarters nearby, Washington is a company town—with the company being the government. The influx of 50,000 workers, many of them young and nearly all tech-oriented, would have an enormous economic and cultural impact.

To attract suitors, Amazon has pointed to Seattle as an example of the transformative effect it can have. In a press release announcing HQ2, Amazon said it “estimates its investments in Seattle from 2010 through 2016 resulted in an additional $38 billion to the city’s economy—every dollar invested by Amazon in Seattle generated an additional 1.4 dollars for the city’s economy overall.” This, along with a $5 billion investment and those 50,000 well-paying jobs, is Amazon’s promise to cities.

Amazon’s own estimates about its economic benefits should be taken with a grain of salt. But it’s clearly had an impact in Seattle, where it is the city’s largest employer, providing jobs to some 40,000 people. It’s contributed to a development boom.

That’s a double-edged sword, however. Seattle is also in the midst of a housing crisis, with King County even going so far as to declare a state of emergency over the issue in 2015. In the last two decades, rents in the county have doubled. They have risen 65 percent in the last nine years, despite an economic recession.

The extent of Amazon’s responsibility is debatable, given that other cities with large, younger workforces have seen dramatic rent and cost-of-living increases in recent years, including Washington D.C. But there is good reason to believe, given D.C.’s own housing crisis, that Amazon would make the problem worse. “Nearly 40,000 black, low-income residents have been displaced from D.C,” Stephanie Sneed of the Fair Budget Coalition, which has co-organized opposition to HQ2 in D.C., told me. “Our position is that the city government isn’t doing enough to stop people from being pushed out of the District and forcing people to leave what’s been a lifetime home for them.”

The tax incentives that would be given to lure Amazon to D.C. would also take away from housing and other social programs. While it’s possible that the resulting economic development would make up for those losses, even 50,000 well-paying jobs might not make up for billions in lost tax revenue.

“If D.C. does get chosen, we have some real issues with how Amazon does business, in terms of fair labor, equitable hiring, and equitable practices for people of color and women in particular,” Sneed said. The opposition to HQ2 won’t just be about tax breaks. It will encompass a range of other issues.

This could end up underscoring all the reasons the federal government should do more to regulate Amazon: that it’s taking more from the government than it’s giving back; that behind a progressive veneer lies a ruthless corporation; that beloved local businesses are being replaced by a retailer that aspires to monopoly. But by entrenching itself in the very seat of government, Amazon could become too close to regulate.