The Fleeting, Unhappy Affair of Amazon HQ2 and New York City

Abstract

This essay analyzes New York’s 2018 proposal to Amazon to locate their second headquarters (HQ2) in New York City. While the proposal was initially successful in November 2018, in the wake of vocal resistance to that decision, Amazon backed out of their decision to locate one of their second headquarters in New York in February 2019. (Though Amazon announced that no official second headquarters would be built in New York, it indicated that their operations would continue to expand there.) The transaction remains significant despite Amazon’s fast reversal, because it illustrates one of the few situations where the specific offerings of a city to a private company are publicly known, because of the unusual circumstances of both the decision and the withdrawal, and because of the example it sets for other city-company negotiations.

This essay provides the context of Amazon’s 2017-2018 city competition for the headquarters and reviews New York’s proposal. Several observations are offered: in addition to the massive resources and infrastructure offered by the city to Amazon, the proposal itself provided a significant amount of valuable due diligence on the city to Amazon, it bypassed or side-stepped several governance processes, it did not address the disruptions that Amazon has had and would likely have had on city life, and it left open the question of future smart city, technological, and data-related collaborations.

Keywords: Amazon HQ2, Cities, Local Governance, Competition, Capital, Big Data, Algorithms, Education, Research & Development, Taxation, Smart Cities, Technology, Surveillance, Consumer Goods, Sensors, Software, The Internet of Things, Artificial Intelligence (AI), Machine Learning, Local Government

JEL Classification: J00, R00, R30, R52, O30, H13, H2, H4