Amazon announces two HQ2 locations - Activate World

Amazon announces two HQ2 locations

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Amazon has announced it will split its second headquarters, HQ2, between the Long Island City section of Queens, New York, and the Crystal City area of Arlington, Virginia. The company plans to evenly split the operations with as many as 25,000 employees in each location.The company began the search across North America in September 2017, with the objective of creating a second, equal headquarters to its Seattle home base. Amazon narrowed the contest to 20 finalist cities in January. After announcing its shortlist, the company conducted whirlwind, two-day site visits to all 20 cities, asking a host of follow-up questions. During these visits the company’s economic development team requested reams of data as detailed as local high school test scores.

According to the Wall Street Journal, “the decision effectively gives Amazon a major presence in three coastal hubs that politically lean left, at a time when tech companies are under scrutiny for their perceived elitism and liberal social views.”

From Amazon’s perspective, the process worked well. For over a year the contest highlighted Amazon as the prize all cities sought, with dozens offering up detailed financial information on their willingness to pay for a strong Amazon presence. In early November, the Wall Street Journal reported that Amazon planned to split its second headquarters between two cities rather than choosing a single location. Amazon executives decided they could recruit more of the best tech talent with this approach. And by halving the size, the company could ease issues with housing, transit and other areas impacted by the addition of tens of thousands of workers.

Some believe the selection process was a farce, even calling it a bait and switch. Critics have pointed out that Amazon encouraged cities to compete against one another to host its new headquarters in ways that essentially forced them to offer incentives that could translate into lost tax revenue, depressed wages, and higher housing costs.

As reported in the NYTimes, this may be part of the company’s strategic plan. “What we see is Amazon evolving into a corporation whose headquarters is virtual and whose physical presence will span the globe,” said Charles R. T. O’Kelley, director of the Berle Center on Corporations, Law and Society at Seattle University. “Instead of being headquartered in one place and moving to a second headquarters, Amazon is going to be, and be thought of as, everywhere.”

Amazon’s 2017 revenue was approximately $177.886 billion, the company employs more than 600,000 people, and its founder, Jeff Bezos, is sometimes the world’s richest person, with a net worth of $137.6 billion in November 2018.

Some lament the lost chance that Amazon would do something truly transformative — not just for the company, but for its new home. “Big tech is at a pivotal moment, and Amazon is at the head of the class,” said Scott Phillips, an entrepreneur who submitted a proposal to build an enormous city for Amazon in rural Oklahoma. “It is time for them to aggressively think not just about their bottom line but about ways they can do right by the world.”

Noteworthy:

  • According to Slate, HQ2 is an anti-trust issue. In total, New York and Virginia will give Amazon upward of $2.8 billion in handouts, grants, and other concessions—including money to help build the new corporate campuses.
  • The next time Amazon wants to build new operations anywhere in America, it will know exactly what local governments can and will offer.
  • Open Markets Institute, a think tank pushing for stronger antitrust enforcement, has called for an investigation of the company’s HQ2 search process. They argue that Amazon has now shown clearly that its power can sway governments as well as commerce.

Quests and actions (Q&A):

  • To have enduring economic impact and a stable source of annual job creation, would it be more effective to fund local startup growth versus providing incentives for large companies such as Amazon?  
  • Will Amazon put the valuable data they acquired from HQ2 bidding cities (like their future infrastructure plans) to use in the coming years to expand its market power and sideline the competition? Is this an unfair business practice? 
  • Is Amazon’s real power the data they are able to collect on their consumers? Are you concerned about aggressive data collection by Amazon and other big tech players?

Sources:  Forbes, NYTimes, Slate, Wall Street Journal

Photo by Christian Wiediger on Unsplash