Last Friday, less than 24 hours after detailing a bizarre plot by the National Enquirer to extort him with nude photos, Jeff Bezos took some hostages of its own. The newspaper he owns reported that Amazon, which had selected New York City as one of two “winners” of its HQ2 sweepstakes, was “reconsidering” its agreement with Governor Andrew Cuomo and Mayor Bill de Blasio to bring 25,000 jobs in exchange for billions in tax breaks and incentives. The alleged reason: mounting opposition from state and local lawmakers and activists in Long Island City, the Queens community where the tech giant planned to build its campus.
On Valentine’s Day, rather than engage with his opponents, Bezos shot the hostages and canceled the deal. De Blasio, despite having courted Amazon, tried to spin this political blow to resonate with the growing backlash against Big Tech:
State Senator Michael Gianaris, one of the fiercest critics of the deal, compared Amazon to a spoiled brat. “Like a petulant child, Amazon insists on getting its way or takes its ball and leaves,” Gianaris said in a statement. “The only thing that happened here is that a community that was going to be profoundly affected by their presence started asking questions.”
But Amazon’s about-face was not a temper tantrum. It was a calculated move to preserve, even enhance, the company’s leverage in trying to extort taxpayer-funded handouts for projects across the country. Amazon is sending the message that it will bend to no city or state government. If any locality tries to cut a better deal—or, god forbid, criticizes the company for its business practices—Amazon will walk away. Bezos is making the cynical, and probably accurate, bet that many desperate communities in America won’t dare to try.
Just a few months ago, it looked as if Amazon had pulled off one of the greatest scams in corporate history. Having dangled 50,000 jobs and $10 billion in investment in a proposed second headquarters in front of every struggling city and municipality in the country, they sat back as lawmakers debased themselves in a race-to-the-bottom to see who could offer the largest set of tax breaks and other incentives. When it came time to decide, Amazon told Detroit and Cleveland to shove off and settled in the two areas that least needed them, New York City and Northern Virginia.
It was the perfect plan—for Amazon. The company collected valuable, often confidential data about infrastructure, educational offerings, and future development plans from areas they would have never considered moving to, which it will use to help perfect its logistics and business strategy. It also got some good PR, at least at first. While some cast the exercise as a capitalist Hunger Games, the HQ2 sweepstakes, as it came to be known, was also a massive marketing ploy, a yearlong corporate Bachelor in which cities wooed the trillion-dollar company. In doing so, it drove up the asking price. The result in New York was nearly $3 billion in tax breaks and a suite of other goodies.
In Virginia, things have mostly worked out for Amazon. Earlier this month, Governor Ralph Northam took a break from embarrassing himself to sign a deal that would provide up to $750 million in incentive cash. But in New York, the HQ2 deal was met with furious resistance. There were protests over the shameful corporate welfare being doled out to one of the most valuable companies in the history of the world, and the impact 50,000 white-collar jobs would have on New York City’s already strained housing and transportation. Alexandria Ocasio-Cortez, the newly sworn-in congresswoman who represents parts of Queens, slammed the “creeping overreach of one of the world’s biggest corporations,” while Senator Kirsten Gillibrand criticized the deal for its “lack of community input and the incentives Amazon received.”
The case being put forward by the deal’s critics was a good one. If Amazon wanted to move to New York City, they could absolutely do so—just without the billions in free money that it absolutely doesn’t need. Amazon brought in $233 billion in revenue in 2018. Bezos is worth $135 billion. And New York City is hardly thirsting for tens of thousands of white-collar jobs. But this was still too much for Amazon, which said in a statement:
“After much thought and deliberation, we’ve decided not to move forward with our plans to build a headquarters for Amazon in Long Island City, Queens. For Amazon, the commitment to build a new headquarters requires positive, collaborative relationships with state and local elected officials who will be supportive over the long-term. While polls show that 70% of New Yorkers support our plans and investment, a number of state and local politicians have made it clear that they oppose our presence and will not work with us to build the type of relationships that are required to go forward with the project we and many others envisioned in Long Island City.”
It’s true that polling suggested that a majority of New York residents approved of the Amazon deal, though it’s unclear if they also approved of the generous subsidies the company would rake in. But Amazon soon realized that the politics of the deal were not in their favor, and that they would face years, perhaps decades, of scrutiny from city and state lawmakers. The deal itself, moreover, would likely become a crucial issue in legislative elections, skewing both the City Council and the state legislature further against Amazon. And with activists bringing negative attention to HQ2’s impact on housing and homelessness and the company’s work with ICE, the deal was clearly becoming a non-starter in America’s media capital.
Amazon still could have renegotiated its deal and won over some of its critics. But to do so would have been to admit that cities can push around one of the world’s most powerful companies. This is not the way that Amazon does business. In Seattle, where it has been headquartered since its inception, the company has been particularly ruthless. Most recently, it threatened to leave Seattle if the city council went forward with a new tax on large corporations aimed at eradicating Seattle’s out-of-control homelessness problem.
Amazon wants to show that even New York, one of the richest cities in the world, isn’t big enough to stand up to it. That’s not the case, clearly. New York can afford to spurn 25,000 jobs. Cleveland or Detroit? Not so much. But that doesn’t necessarily mean Amazon is headed there. For the moment, they have “no plans to re-open the HQ2 search” and may simply add more workers to their Northern Virginia campus, and a development planned for Nashville. Amazon may well claim that New York ruined it for everyone, when in reality what the company is offering is a bad deal for any community, no matter how dire things may be. Only a corporation as large and audacious as Amazon would believe it can take the entire country hostage.