Amazon And New York: What Are The Lessons To BeLearned?

Amazon’s decision to cancel its plans for a second macro-corporate headquarters in New York, due mainly to resident activism in Queens is of hugely symbolic importance. The company planned huge investments and to create some 50,000 jobs, but has pulled out at the last moment amid local people’s concerns about the possible impact of gentrification in the northern borough and accusations that they would end up paying for those jobs and investment with their taxes.

Amazon’s decision is being reported as a victory for activism against the world’s largest company, but in practice it also sends out a powerful message about the city’s potential to attract investment and become an east coast technology hub. The announcement, in September 2017, of its plans to open a second corporate headquarters in the United States, the location of which would be decided via bids from cities, triggered a kind of collective madness, as would-be hosts offered increasingly attractive conditions.

A lot was at stake: Amazon’s Seattle offices comprise 33 buildings with more than 750,000 square meters of floor space were 40,000 people work, along with some 53,000 indirect jobs, most of them highly qualified, that contribute much more to the city than the $25.7 billion in salaries they are paid. The company contributes $43 million to the municipal transport system of Seattle, providing free travel for its employees. In 2016, it was estimated that visitors to the company and its employees accounted for a total of 233,000 hotel nights. The impact of the arrival of a second Amazon headquarters on a city would be transformational, regardless of its size, and many saw it as a potential life saver. No less than 238 cities put in a bid, from which the company drew up a shortlist of 20, which it then whittled down to New York and Arlington (Virginia) after it was given guarantees of substantial incentives.

Questions were asked at the time: is it reasonable to use public money to provide tax breaks for the world’s biggest company? Campaigners, among them Alexandria Ocasio-Cortez, highlighted this, arguing that Amazon’s potential to transform the local economy would not benefit residents. Amazon will now have to rethink its expansion strategy in a much more potentially hostile environment than in 2017, when it originally announced its plans.

Jeff Bezos did not ask anyone’s permission to set up his company in Seattle and his relationship with the city today, which along with Microsoft has become one of its symbols, could certainly be described as positive, although there are plenty of people who would dispute that. But the point here is that Amazon is no longer a startup but a global giant whose presence in any city will have unforeseen consequences, good and bad. It’s not the same to be born and grow up into a behemoth in one place as it is to suddenly arrive somewhere and buy everything up, completely revolutionizing things.

Some of New York’s rivals in bidding to host Amazon’s headquarters will be astonished at what has happened, but it should prompt serious thought about what went wrong: was it a good idea for the bidding process to be so public and wasn’t it inevitable that cities would resort to increasingly desperate and unrealistic measures to win the beauty contest? Was no thought given to those residents who, rather than seeing the arrival of Amazon as an opportunity, saw it as a possible threat? Wasn’t some kind of backlash inevitable? Should a company like Amazon, undoubtedly popular, but also the focus of much criticism, have been involved a dynamic like this, which simply reinforced the arguments of many of its critics?

For Amazon, cancelling its plans is not just a financial defeat that will see it lose significant incentives and delay important expansion plans; it’s also the crystallization of the growing hostility toward what it’s seen to represent. For New York, it’s a failure that makes it look hostile to technology and innovation, turning its back on the chance to compete with San Francisco as the tech capital of the United States – although many argue that San Francisco has paid too high a price for it.

Meanwhile, other technology companies take note: in today’s high-stakes world, the price of hubris can be high indeed.

This post first appeared on Forbes.com. To see the original, click here.