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Amazon’s Withdrawal Raises Questions about New York

Amazon shocked many people last week when it cancelled plans to set up a big new headquarters in New York City.

Amazon’s decision means the company is suspending plans to develop part of Queens, New York. The project would have created 25,000 jobs.

The decision came after some politicians and social activists angrily protested the nearly $3 billion in assistance promised to the company.

“We are disappointed…we love New York,” said a statement from Amazon on its blog after the cancellation was announced.

The collapse of the project appears to raise questions about the growing power of large technology companies. Some people also disliked Amazon’s anti-labor position.

“This all of a sudden became the perfect test case for all those arguments,” said Joe Parilla. He works for the Brookings Institution research group.

Amazon announced in November that New York was one of two areas chosen for its second headquarters. The other was Crystal City, in Arlington, Virginia.

The announcement followed months of secret negotiations between Amazon and government officials in the two states.

In New York, the company planned to spend $2.5 billion to build its new offices.

Because of New York’s economic strength, the city will easily recover from the Amazon decision. But some observers say it could frighten other tech companies that are thinking about moving to New York. The city wants to be seen as the East Coast version of California’s Silicon Valley, the home of many high-tech businesses.

“One of the real risks here is the message we send to companies that want to come to New York,” said Julie Samuels. She heads the industry group Tech: NYC.

Opposition Grows

In November, New York Mayor Bill de Blasio and Governor Andrew Cuomo were happy to welcome Amazon to New York. They believed it would help the growing tech economy and create billions of dollars in taxes that could be used for schools, housing and other projects.

But opposition quickly grew as people learned of the deals the city promised to the company.

Critics pointed to the $3 billion incentives the city promised the company as well as some of Amazon’s demands.

Thomas Stringer works for a company that advises large companies. He said he knew something was wrong right from the start with the Amazon deal.

“If this was done right, all the elected officials would have been out there touting how great it was. When you didn’t see that happen, you knew something was wrong,” he said.

Stringer added that city and state government officials need to rethink their decision to carry out the negotiations in secret. Community leaders and potential critics were not included in the talks. They were angry when they learned about the incentives.

Amazon must also take some blame, said Joe Parilla. He said the publicity surrounding the hunt for a new headquarters and the way several cities were asked to offer incentives may have led to a backlash.

New York is still strong

But other tech companies are doing well in New York City.

Google is spending $2.4 billion to build up its Manhattan offices. Cloud-computing company Salesforce has put its name on Verizon’s former headquarters. And music service Spotify just signed a rental agreement for a large space at the new World Trade Center.

New York has higher costs than other cities. But many tech companies want to be there because it is home to many highly skilled people, education and cultural centers, as well as Wall Street, the financial center of the United States.

No other U.S. city has as many computer-related jobs as New York City. It has 225,600, says the Bureau of Labor Statistics. But San Francisco, San Jose, Seattle, Washington, Boston, Atlanta and Dallas each have a greater percentage of their workers in tech jobs.

Even after cancelling the project, Amazon still has 5,000 employees in New York City, without including those who work at Whole Foods Market stores.

Words in This Story

incentive – n. something that has an effect or persuades a person to do something or to work harder

disappoint – v. to make someone unhappy by not being as good as expected or by not doing something that was hoped for

tout – v. to talk about something or someone as being very good, effective or skillful

backlash – n. a strong public reaction against something