The Business Times

Amazon's pullout is a blow to New York City's tech momentum

Published Sun, Feb 17, 2019 · 09:50 PM

New York

NEW YORK worked hard for many years to transform itself into a top tech hub and finally it seemed to be just that, with one report ranking the city as the best place in the world for technology.

Plans by Inc for a huge new corporate campus in Queens would have cemented New York's status as an East Coast alternative to Silicon Valley.

Then Amazon abruptly pulled the plug, giving in to fierce opposition from local politicians and community organisers, and taking its pledge of 25,000 high-paying tech jobs off the table.

The move could be a blow to the city's booming tech industry, experts said.

"There's a real risk that Amazon's decision does make it more difficult for big companies who want to take those really big bets on New York to take them," said Julie Samuels, the executive director of Tech:NYC, which represents more than 650 tech companies in the area.

In its pitch to Amazon to come to New York, Mayor Bill de Blasio cited the city's diversity of talent and connections with established industries beyond tech including finance, fashion, media, art and real estate.

Those attributes have been luring Amazon's fellow titans for years, and have helped create a sector that now counts more than 326,000 jobs, according to Tech:NYC.

"When you attract and grow a strong engineering and entrepreneurial base, those folks would have worked at Amazon and eventually they would have left Amazon and started new companies," Ms Samuels said. "People move around from job to job so I actually think this is really unfortunate for tech companies that are already here."

Google, which opened its first office outside of California in New York in 2000, last year pledged to invest more than US$1 billion for a new Manhattan campus. The expansion will allow the Alphabet Inc unit to double its workforce in the city to 14,000 over the next decade.

Twitter Inc, Facebook Inc and Uber Technologies Inc also all have big offices in New York, and Apple Inc has plans to expand in the city too.

Amazon, which already has 5,000 employees in town, said last Thursday it will continue to build its presence in the city over time.

"Just as Google, in Silicon Alley in Manhattan, anchored a profusion of tech companies, we thought the same thing was going to happen with the Amazon campus in Queens," said Kathryn Wylde, chief executive officer of nonprofit Partnership for New York City, which conducts research, formulates policy and stimulates economic development on behalf of the city's largest private sector employers.

An Amazon headquarters, presumably filled with senior executives, would have also "reinforced New York as a decision-making centre".

Mr de Blasio had called the jobs Amazon promised to bring "mission critical" for the city's economy, which can no longer count on Wall Street as its business engine.

And more than just creating jobs, Amazon had also proposed to work with nearby LaGuardia Community College, based in Long Island City, to help students learn skills for entry-level tech roles.

"Amazon offered us an opportunity to really build a different kind of integrated workforce development process," said Gail Mellow, president of LaGuardia Community College. "We could have made a powerful connection to people who really need these jobs and I'm sorry to lose this opportunity."

Despite some 11th-hour negotiations, Amazon withdrew its plans for the new corporate campus on Thursday after fierce resistance from residents and politicians who balked at the US$3 billion in government subsidies offered to the company run by Jeff Bezos, the world's richest man.

The backlash also stemmed from fears of rising rents, an overburdened subway system and Amazon's staunchly anti-union stance. The mayor lashed out at Amazon for turning-tail, but said the city would be better off without them in the end.

"We have a strong technology community in this city, and growing, and a number of other companies recently, major tech companies, have expanded in the city without a lot of drama, without desiring an operatic process and this tech community here is going to be stronger and stronger regardless of Amazon," Mr de Blasio said in an interview with Brian Lehrer on WNYC last Friday.

Some people saw a silver lining in losing Amazon. For startups, in particular, there may be at least one reason to breathe "a sigh of relief" - at least in the short term.

Eyal Bino, a partner at ICONYC labs, an accelerator for Israeli startups in New York City, said they won't have to compete with Amazon for talent. New York's startup ecosystem is worth more than US$71 billion, making it the third-most valuable in the world, according to Tech:NYC.

Amazon's presence would have probably added to investment and acquisitions, something budding companies will now miss out on, Bino said. "It's one of those things like you stop and say 'ugh this is a big disappointment,'" Mr Bino said. "But we're not going to stop here." BLOOMBERG

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