Amazon has withdrawn from its decision to build a new headquarters in New York, following opposition from local politicians and activist groups. The move illustrates both a growing discontent with government incentives for big business and the risks of a secretive strategy in negotiating $3 billion of public subsidies while miscalculating public goodwill toward the brand.
On Thursday last week, the Seattle-based e-commerce titan cancelled plans to build a large new campus in the Long Island City area of the borough of Queens, New York City, the city’s paper of record reported. The company faced fierce opposition – which it had not expected – from local representatives, activists, and union leaders. The change of plan came after the company announced in November its decision to open a site for a 25,000-strong workforce in the city, following a long and much publicised search for a new HQ that had seen cities around the United States offering any number of incentives to the company.
At the time, supporters argued that New York City would ultimately bring in $27 billion in tax revenue as a result of the investment. Detractors, meanwhile, questioned why such subsidies were going to an extremely rich company and not being spent on the city’s housing and transport problems. They also voiced concerns that an influx of tech workers to the city would only accelerate and fuel inequality.
“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,” a statement from the company said. “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.”
Politics aside, the story reflects a critical weakness of tech companies: that, despite stellar stock market performance, the public is not automatically an avid supporter despite being a loyal customer. Though a vast majority of respondents to a December Quinnipiac University poll (70%) shop on Amazon, opinion was far more divided over the terms of the deal. A total of 57% of surveyed New Yorkers approved of Amazon coming to the city. In support of the incentives deal however: 46%; in opposition: 44%.
“While New Yorkers give the thumbs up to Amazon moving one of its new headquarters to Long Island City, they are divided over the sizeable carrot offered to the online retail giant”, said Mary Snow, a polling analyst for the Quinnipiac University Poll.
Part of the problem is that the deal was hashed out in secret without the involvement of local lawmakers, while being spearheaded by both the Mayor, Bill de Blasio, and state Governor Andrew Cuomo. As the Verge’s Casey Newton observes, the promise of jobs is not enough to win public support any more: people are becoming increasingly aware of a fracturing of the economy in which a small group of highly educated professionals see wage growth, while the other group works in the service industries that support the professionals – for them, wages are not growing. For many New Yorkers, the promise of Amazon jobs was the promise of work that they would never be trained or helped to qualify for.
“If our other tech giants take one lesson from Amazon’s aborted attempt to build a heavily subsidized regional office, I hope it’s this one: that the more secrecy you demand in negotiating with the public sector, the more risk of catastrophe you bring upon yourself”, Newton writes.
Meanwhile, Andrew Edgecliffe-Johnson, writing in the Financial Times offered a similar assessment. Amazon’s continued opposition to business tax hikes in Seattle reaffirmed its image as a faceless corporation with no concern for the people in the cities that cater to it. In addition, Amazon’s decision to walk away from Long Island without looking for an alternative, say in a second-tier city that needed to diversify its economy, “suggests a tin ear to the public mood.”
While Amazon will probably recover swiftly from the defeat, it shows that even the most successful companies need to grapple with a disparity in performance and perception, and perhaps think more about how they can give something back.
On Thursday last week, the Seattle-based e-commerce titan cancelled plans to build a large new campus in the Long Island City area of the borough of Queens, New York City, the city’s paper of record reported. The company faced fierce opposition – which it had not expected – from local representatives, activists, and union leaders. The change of plan came after the company announced in November its decision to open a site for a 25,000-strong workforce in the city, following a long and much publicised search for a new HQ that had seen cities around the United States offering any number of incentives to the company.
At the time, supporters argued that New York City would ultimately bring in $27 billion in tax revenue as a result of the investment. Detractors, meanwhile, questioned why such subsidies were going to an extremely rich company and not being spent on the city’s housing and transport problems. They also voiced concerns that an influx of tech workers to the city would only accelerate and fuel inequality.
“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,” a statement from the company said. “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.”
Politics aside, the story reflects a critical weakness of tech companies: that, despite stellar stock market performance, the public is not automatically an avid supporter despite being a loyal customer. Though a vast majority of respondents to a December Quinnipiac University poll (70%) shop on Amazon, opinion was far more divided over the terms of the deal. A total of 57% of surveyed New Yorkers approved of Amazon coming to the city. In support of the incentives deal however: 46%; in opposition: 44%.
“While New Yorkers give the thumbs up to Amazon moving one of its new headquarters to Long Island City, they are divided over the sizeable carrot offered to the online retail giant”, said Mary Snow, a polling analyst for the Quinnipiac University Poll.
Part of the problem is that the deal was hashed out in secret without the involvement of local lawmakers, while being spearheaded by both the Mayor, Bill de Blasio, and state Governor Andrew Cuomo. As the Verge’s Casey Newton observes, the promise of jobs is not enough to win public support any more: people are becoming increasingly aware of a fracturing of the economy in which a small group of highly educated professionals see wage growth, while the other group works in the service industries that support the professionals – for them, wages are not growing. For many New Yorkers, the promise of Amazon jobs was the promise of work that they would never be trained or helped to qualify for.
“If our other tech giants take one lesson from Amazon’s aborted attempt to build a heavily subsidized regional office, I hope it’s this one: that the more secrecy you demand in negotiating with the public sector, the more risk of catastrophe you bring upon yourself”, Newton writes.
Meanwhile, Andrew Edgecliffe-Johnson, writing in the Financial Times offered a similar assessment. Amazon’s continued opposition to business tax hikes in Seattle reaffirmed its image as a faceless corporation with no concern for the people in the cities that cater to it. In addition, Amazon’s decision to walk away from Long Island without looking for an alternative, say in a second-tier city that needed to diversify its economy, “suggests a tin ear to the public mood.”
While Amazon will probably recover swiftly from the defeat, it shows that even the most successful companies need to grapple with a disparity in performance and perception, and perhaps think more about how they can give something back.
Sourced from New York Times, Amazon, Quinnipiac University, The Verge, Financial Times; additional content by WARC staff
