In a messy breakup, Amazon backs away from NYC headquarters deal

The tech giant had spent months teasing a deal to develop a major hub office in Queens. After some backlash, the company opted out, prompting a new round of high-profile commentary.

After all the noise surrounding Amazon’s new office hub, the company is taking back promises to bring 25,000 new jobs to New York.

The buildup to Amazon’s announcement of a second headquarters (it still has its primary presence in Seattle) was something of a PR circus, with cities vying for consideration with gifts, tax incentives and publicity stunts.

New York and a location in Virginia near Washington, D.C., were the eventual winners, but once the public caught wind of the tax incentives offered to one of the world’s biggest corporations, some weren’t happy.

Now, Amazon says it won’t move forward with its plans in New York.

The New York Times wrote:

Amazon on Thursday canceled its plans to build an expansive corporate campus in New York City after facing an unexpectedly fierce backlash from lawmakers, progressive activists and union leaders, who contended that a tech giant did not deserve nearly $3 billion in government incentives.

The decision was an abrupt turnabout by Amazon after a much-publicized search for a second headquarters, which had ended with its announcement in November that it would open two new sites — one in Queens, with more than 25,000 jobs, and another in Virginia.

Amazon’s retreat was a blow to Gov. Andrew M. Cuomo and Mayor Bill de Blasio, damaging their effort to further diversify the city’s economy by making it an inviting location for the technology industry.

Amazon released a statement on the decision, citing poor relationships with local government as the reason for the change.

The Verge reported:

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.

We are disappointed to have reached this conclusion—we love New York, its incomparable dynamism, people, and culture—and particularly the community of Long Island City, where we have gotten to know so many optimistic, forward-leaning community leaders, small business owners, and residents. There are currently over 5,000 Amazon employees in Brooklyn, Manhattan, and Staten Island, and we plan to continue growing these teams.

We are deeply grateful to Governor Cuomo, Mayor de Blasio, and their staffs, who so enthusiastically and graciously invited us to build in New York City and supported us during the process. Governor Cuomo and Mayor de Blasio have worked tirelessly on behalf of New Yorkers to encourage local investment and job creation, and we can’t speak positively enough about all their efforts. The steadfast commitment and dedication that these leaders have demonstrated to the communities they represent inspired us from the very beginning and is one of the big reasons our decision was so difficult.

Some weren’t surprised by the backlash to the deal, asserting that public appetite for tax incentives for corporations has evaporated.

The Verge wrote:

In November, on the day Amazon announced the winners of its contest for a second headquarters, I suggested that the company had fatally misunderstood the current relationship between tech giants and public opinion:

It’s hard not to feel today as if the company misread the room — overestimating the public’s appetite for a billion-dollar giveaway to one of the world’s biggest companies, and underestimating the public’s ability to raise hell on- and offline. Amazon may yet feel that pain, in the long run.

Official positions

Politicians issued an array of statements, some lamenting the loss for New York and others calling the retreat a victory for the public at large.

CNN reported:

“You have to be tough to make it in New York City. We gave Amazon the opportunity to be a good neighbor and do business in the greatest city in the world,” New York City Mayor Bill de Blasio said in a tweet Thursday. “Instead of working with the community, Amazon threw away that opportunity.”

Carolyn Maloney, a New York congresswoman, said she was “disappointed” New York would lose out on 25,000 jobs and “hundreds of millions of dollars in new investments.”

“The deal could have been improved. There were legitimate concerns raised and aspects that I wanted changed. I was ready to work for those changes,” she wrote on Twitter. “But now, we won’t have a chance to do that.”

Others like Alexandria Ocasio-Cortez, the progressive freshman Congresswoman from New York, hailed Amazon’s withdrawal as a victory for members of the community who protested the deal in recent months.

“Anything is possible,” she wrote on Twitter. “Today was the day a group of dedicated, everyday New Yorkers & their neighbors defeated Amazon’s corporate greed, its worker exploitation, and the power of the richest man in the world.”

Amazon promised it would still create new jobs, especially for the site of its other already planned expansions including Virginia and Nashville, Tennessee.

Officials nationwide were ready to present their respective locales as welcoming to Amazon and other major businesses.

CNN continued:

In its statement, Amazon said it has no plans to “reopen the HQ2 search at this time.” Instead, it plans to move forward with its office expansions in Virginia as well as Nashville, where it is building a new hub expected to employ 5,000 people.

That makes Virginia the clear winner of Amazon’s very public HQ contest.

“We are excited that Amazon’s plans for Virginia remain in place and that we can continue working together to position Virginia’s dynamic tech sector for healthy, sustained, statewide growth,” Stephen Moret, the CEO of the Virginia Economic Development Partnership who helped spearhead the HQ2 negotiations for the region, told CNN Business.

New York leaders tried to combat the growing perception that the city shuns big tech investment.

CNN reported:

“New York City is today one of the most dynamic tech hubs in the world, but there is no guarantee we will maintain this status in the future, which makes this news so disappointing,” said Julie Samuels, Executive Director, Tech:NYC, a non-profit network of technology leaders in the city that counts Amazon as a member.

For now, however, Amazon is just one company. Google reiterated plans on Wednesday to develop a new campus in New York as part of its broader real estate expansions throughout the US.

“New York City is still open for business and will retain its status as a world class center for tech and innovation,” John H. Banks, president of the Real Estate Board of New York, said in a statement.

Other New York leaders blamed Amazon for reneging.

The New York Times reported:

“Amazon and the governor and everybody agreed yesterday on a way to move forward,” said Stuart Appelbaum of the retail union, who was part of the meeting. “Shame on them. The arrogance of saying ‘do it my way or not at all.”’

One big lesson for companies looking to make an Amazon-size deal is to commit to transparency.

Casey Newton for The Verge wrote:

It’s only natural that Amazon saw its promise to create 25,000 jobs as a blessing, for creating jobs is most of what we have ever asked of American companies. But given the realities of our economy — an economy that Amazon is relentlessly and ruthlessly transforming according to its narrow self-interest — it’s also only natural that many New Yorkers wanted nothing to do with it.

Of course, the company might have realized all this sooner, had it not pursued its deal in near-total absence of public input or scrutiny. The company’s insistence that its multibillion-dollar giveaway be negotiated in secrecy insulated it from the criticisms that went viral the instant it was revealed — which illustrates how self-defeating the company’s strategy was in the first the place.

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.

PR Daily readers, what do you think of Amazon’s decision and messaging, as well as the blowback to its pullout?

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