Cities competing for Amazon HQ2 gave company vital data

Observers say the tech giant will use that information to its competitive advantage

SAN FRANCISCO— What a farce. That was one of the immediate reactions when word leaked out on Monday that Amazon’s much-ballyhooed search for a second headquarters outside of Seattle would result in not one, but two new locations. On Twitter, people used farce, sham or stunt to describe what had happened.

Amazon’s critics were apoplectic at what they called a bait and switch.

“I was shocked,” said Robert B. Engel of the Free & Fair Markets Initiative, a non-profit that is a determined foe of the retailer on all fronts. “They’ve duped more than the bidders. They’ve duped all of us. They can’t even live up to a promise that wasn’t fair to anyone but Amazon.” From the company’s point of view, however, things seem to be working out rather nicely.

The quest kept a persistent spotlight on Amazon as the suitor everyone sought — would it choose Toronto? Denver? maybe Atlanta? surely Chicago? — even as the company apparently decided instead to set up smaller operations in the Washington metro area and in New York City, the two most obvious places all along. (Amazon declined to comment.)

Amid the guessing game, the company got information from dozens of cities about how much they would pay for a strong Amazon presence, valuable data that it will no doubt use to expand.

“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.”

This, after all, is how Amazon sees its

destiny: to become not just the everything store, as it was branded a mere five years ago, but the everything company. People will buy groceries from Amazon, be entertained by Amazon shows, pick up snacks at Amazon Go stores, see all the ads they need on Amazon, find a plumber through Amazon, communicate through Amazon’s Alexa virtual assistant — and that is just the beginning.

While other cities are reportedly in late-stage negotations with Amazon, Toronto has heard nothing. Both Mayor John Tory's office and Toronto Global, the intergovernmental agency that co-ordinated Toronto's bid, told the Star on Tuesday there has been no recent contact with the Seattlebased retail giant. Both declined comment on Toronto's apparent loss until Amazon makes it official.

Set against such ambition, the words “second headquarters” or, in Amazon parlance, “HQ2,” which proved so beguiling to the media, politicians and local governments ultimately mean little. “The word ‘headquarters’ is a non-technical, nonlegal term, but it plays well in the press to talk like this,” O’Kelley said. “It was a great PR move in all kinds of ways.”

Qinghai Wang, a finance professor at the University of Central Florida who has studied corporate headquarters, agreed. “Corporate headquarters, or at least the part that is central to decision-making, should be just in one place,” he said. “Boeing, another Seattle company that moved headquarters more than 10 years ago, only moved a few hundred people to Chicago. Amazon is a big company, and it has a very big headquarters already.”

Even as the news sank in on Monday, some people rued the lost chance that Amazon would do something truly transformative — not just for the company, but for its new home.

Washington and New York already have lots of tech talent, which of course explains why Amazon would move to those places. “Amazon could have pulled a new region of the country onto the ‘haves’ list and pioneered much of the world’s future in the process,” Phillips lamented.

“It’s tempting to roll your eyes at this soap opera, but Amazon will walk away from this stunt with a cache of incredibly valuable data,” said Stacy Mitchell of the Institute for Local SelfReliance, a frequent Amazon critic.

“It’s learned all kinds of things from the bidding cities — like their future infrastructure plans — that even their citizens are not privy to.”

Here’s what next, she said: “Amazon will put this data to prodigious use in the coming years as it looks to expand its market power and sideline the competition.”

Amazon is always expanding its market power. Consider a routine news release it issued Friday: “Amazon Announces 14th Inland Empire Fulfilment Center in Beaumont,” it said. Fulfilment centre is a fancy term for warehouse. The Inland Empire is a vast area east of Los Angeles. Amazon said it was now the largest employer in the region.

Amazon likes to release news on its own schedule.

But the headquarters story leaked out to outlets including The Washington Post — owned by Bezos — and The Wall Street Journal. It was a rare stumble for a company that excels at controlling the narrative.

The real narrative, now and always with Amazon, is its ambition — sometimes veiled, but never absent.