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Amazon Got Burned by Its Own HQ2 Game Show

The tech giant’s competition to find its second headquarters was always designed to have one winner: Amazon. Thursday’s news that the company is ditching New York City shows that it wasn’t prepared for the backlash to its disingenuous approach.

Getty Images/Ringer illustration

The rules of the game seemed simple. Amazon was going to build a second headquarters, and any North American city could apply for consideration. Fill out a form, show that extra bit of passion or wit or desperation in your application, and your city could become home to the vaunted HQ2. The competition appealed to lofty American ideals about meritocracy and flattered cities that would not be logical fits for an $800 billion, profit-hungry megacorporation. Who doesn’t love an underdog story?

But Amazon was playing a game within a game. When the company announced in November that out of 238 applicants it had selected Crystal City, a Virginia suburb south of Washington, D.C., and Long Island City, a Queens neighborhood in New York, as the sites of its two HQ2s, it became clear that the underdogs had never stood a chance. They were merely points of leverage for a company that always intended to move to the seats of political and economic power in the U.S., but wanted billions of dollars in tax incentives as a reward for doing so. This was a manipulative gambit, to be sure, but we’d all gone along with it, and our deep-seated national belief that the people who win tend to deserve it required accepting the outcome.

With Thursday’s announcement that Amazon is abandoning plans to build an enormous office in New York, though, Amazon revealed a third level to this nesting doll of schemes. There is no game Amazon will play in which it will not unequivocally win. The rules merely exist for Amazon to choose the terms on which it will declare victory.

Consider how the last few months have played out. Amazon brokered its deal to bring HQ2-2 to New York with Mayor Bill de Blasio and Governor Andrew Cuomo. They did so without any input from the City Council, even though local officials typically weigh in on such deals. After the deal was announced, New Yorkers voiced plenty of concerns with a package negotiated in secret. The $2.8 billion in tax breaks dwarfed Virginia’s incentives package for the same number of jobs. At a City Council hearing in January, a company executive said Amazon did not intend to let workers in the new facility unionize. Housing prices surged in Long Island City after the HQ2 announcement, and more neighborhoods were expected to be affected as a wave of high-earning employees arrived in Queens and Brooklyn. People fretted that the infusion of new workers would stress a deteriorating subway system.

Amazon could have addressed these concerns in good faith. Successful large-scale development projects such as this require buy-in from the constituents who will be most directly affected. But from the company’s perspective, the game was finished the moment that Cuomo and de Blasio agreed to play nice and cough up a huge tax break. It was only by stoking the HQ2 frenzy for more than a year that Amazon brought unprecedented attention to the tactics that corporations commonly use to extract huge sums from cities. And by playing the game as cynically as possible, the tech giant made itself a political target. New Yorkers stormed Amazon’s Manhattan bookstore and the Long Island City construction site in protest. U.S. Representative Alexandria Ocasio-Cortez and others on the left got in the requisite Twitter dunks. Most crucially, Michael Gianaris, a state senator and vocal critic of HQ2, was appointed to a state board that could have blocked the deal.

So Amazon changed the rules—again. Instead of resuming its search for a new home, Amazon now says that no one will get the second half of its second headquarters. It is unclear whether Amazon intends to locate all 50,000 workers it dangled in front of the country as part of its reality-show competition to HQ2-1 in Northern Virginia, or if the company’s new site in Nashville will take an expanded role. Amazon could also quietly expand its existing New York offices in the other boroughs, as it indicated in its press release. Ultimately, the speculation doesn’t matter, because the 50,000 figure was arbitrary, a nice round number for the purposes of the game.

Amazon blames meddling local lawmakers for scuttling the deal, but the company should own up to its agency in meeting legitimate local concerns with hardball. It’s a recurring Amazon tactic. In Seattle, the tech giant stopped construction on a new building last spring to protest a proposed per-employee tax to raise funding for affordable housing and homelessness. There, Amazon got its way when the tax was rescinded by the City Council just weeks after it was passed. The entire HQ2 framing—and the false insistence that it would be a “full equal” with the company’s true home—can be seen as a rebuke of critics who question whether Amazon’s influence has been positive in Seattle. This is a company that likes to punish those who aren’t grateful for its presence.

There are other ways for companies—even ravenous, fast-growing ones—to behave. Google is planning to develop a massive new campus in San Jose without taking any tax incentives. Microsoft just pledged $500 million to address the housing crisis in the Seattle metro area, a problem that it and Amazon helped create by generating more new jobs faster than the region could build homes. Salesforce waged a campaign to tax itself in San Francisco. These companies act not out of altruism, but out of political calculus: It’s in their best interest to maintain at least the illusion of meritocracy, to make people feel like they have a chance to survive even if they don’t work at one of the largest tech corporations in the world.

Amazon was surprised by the vehement pushback in New York because it doesn’t understand how quickly and widely this illusion is shattering. The company is not taking its coveted jobs to a city that really needs them because it isn’t motivated to work in the national interest by expanding economic opportunity. HQ2 fed off the notion that the United States remains a place of equal opportunity no matter where you hail from. But Amazon’s game was designed to work for Amazon, and no one else. The rules didn’t matter in the first place.