Are Amazon HQ2 Criticisms Valid, Overblown — Or Both?
Like the entire HQ2 selection process, the decision by Amazon to split its new headquarters between two cities, Arlington, Va. and Long Island City in Queens, N.Y., has gotten plenty of attention from business publications, media talking heads and politicians alike. While the move is anticipated to bring 50,000 jobs to the two metropolitan areas, the company’s drawn-out selection process has generated plenty of negative criticism directed at the e-Commerce giant.
The RTP team discusses whether Amazon played fair with its selection process, and speculates on some of the less obvious reasons for the final choices.
Debbie Hauss, Editor-in-Chief: It’s disturbing that Jeff Bezos dragged this out for so long. He is now in possession of detailed data on each city that was not selected, which he can use to his future advantage. Additionally, he selected cities near to each other, and is receiving $2.4 billion in incentives from the two states, plus Tennessee – the location for the new Amazon hub. Many local businesses are happy with the decision, according to Homebase: Food and beverage, retail, and health & fitness stand to receive an influx of customers. Others are not happy, including politicians, as reported by the Washington Post: “We are witness to a cynical game in which Amazon duped New York into offering unprecedented amounts of tax dollars to one of the wealthiest companies on Earth for a promise of jobs that would represent less than 3% of the jobs typically created in our city over a 10 year period.” — Sen. Michael Gianaris and City Council Member Jimmy Van Bramer.
Adam Blair, Executive Editor: New York Times business columnist James B. Stewart chided Amazon for choosing two cities that “didn’t need” its influx of jobs, New York and Washington, D.C., rather than a heartland metropolis such as Indianapolis, Detroit, St. Louis, Cleveland or Columbus, Ohio. “Picking one of these cities would have been transformative…as an affirmation that there are great places to live in America that don’t offer ocean views and $3,000-a-square-foot condos,” Stewart wrote. Undoubtedly true — but Amazon’s responsibilities are to its shareholders, employees and customers, not the country’s common good. No disrespect to the also-ran cities, but Amazon wanted places with a ready supply of tech talent; let’s remember that most of its profits come from cloud services, not its retail operations. I doubt Jeff Bezos would be willing to wait until Detroit remade itself as a tech hub. And as Scott Galloway cynically noted, Bezos has houses in New York and Washington D.C. — an almost infallible indicator of where a corporate HQ will be located.
Glenn Taylor, Senior Editor: I wouldn’t have minded these selections if two big things about it were different: 1.) The selection process was more transparent — it’s simply not fair to string along other municipalities if you were always going to pick an obvious choice; and 2.) The outrageous tax incentives weren’t attached to the deal. The second part reminds me of whenever a pro sports team moves to a new city (or threatens to leave its current one), and the state fronts the bill for the new stadium. Sure, a stadium is an economic driver that gets people to spend and opens up jobs, but the billionaire in charge of the team can’t front the bill? Given what Amazon got from the two cities, and even Nashville, the company was likely to get a massive incentive no matter where it sited HQ2. I have no doubt that being home to the biggest e-Commerce business in the world can bring plenty of healthy revenue into the local economies in the long run; I totally expect that to happen. But cities shouldn’t feel the need to sacrifice immense capital sums in the short term when Amazon certainly can afford them on its own.
Bryan Wassel, Associate Editor: Amazon may very well have known it would choose New York and Washington D.C. from the start — New York City is a well-equipped tech hub, while Washington puts the retail giant near the government’s seat of power. However, that doesn’t mean Amazon was just stringing the other competitors along for no reason. Those failed proposals told the company just what these other municipalities would give up to earn its business, and they no doubt included other actionable information about infrastructure plans and growth potential. This could be valuable intel for future smaller projects, such as distribution centers or innovation hubs. If Amazon is serious about expanding its network of physical stores, that may well entail the need for more warehouses and other support infrastructure. By farming out proposals from cities across the U.S., the retail giant has gathered the information it needs to create a bigger, more detailed map of how such a plan could proceed.