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HQ2: How Amazon Made Governments Do Their Bidding for Free

Linked by Paul Ciano on December 11, 2018

Andrea O’Sullivan, Reason.com:

There were many problems with how Amazon’s search for the site of its new “HQ2” corporate offices went down.

There were the over-the-top subsidies that state and local governments offered to entice the tech giant to their borders. Then there was the general lack of transparency for the taxpayers footing the bill. And who could forget the sometimes-nauseating press for this torrid competition in corruption, as if an extension of government privileges to a favored mega-firm was some kind of fairy tale love story.

All of this has served Amazon quite well. The downsides, when they did crop up, were minimal.

What have gone less discussed are the many indirect ways in which policymakers were unknowingly deputized to bolster Amazon’s bottom line. It really was ingenious on Amazon’s part. They have been able to not only have their pick of the nation’s plum and primed office space, they will be able to monetize the resulting data too.

The Amazon HQ2 search was not about HQ2: it was market research.

The mayors and governors and councilmen and commissioners and local developers of America handed priceless information about their plans, investments, and reserve prices to Jeff Bezos for free.

What could Amazon do with this data?

For starters, Amazon now knows exactly what each area is willing to pay for a shot at some sweet tech investment. This gives the company a nice, fat Rolodex for the next time it needs to open a suite. And we can be sure they’ll be jonesing for more treats on the next round.

There is a competition angle as well. Think about what Amazon does. It is an e-commerce company, responsible for almost half of all online retail in the US. This means it is also a logistics company, and may soon specialize further in innovative transport methods. It is a cloud computing provider, powering some 40 percent of application workloads with its global server network. And it is a consumer product company in its own right, offering branded merchandise, gadgets, media, and even credit as part of its sprawling empire.

Amazon is now privy to information about where different municipalities are going to direct investment and infrastructure in the near future. The company can exploit this information.

Paul Ciano

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