The Amazon grand prize just got a lot smaller, especially for Chicago. No longer does the widely watched contest for Amazon’s “second headquarters” offer what Chicago needs most—indisputable affirmation as a global technology hub. Winning a true, co-equal headquarters of a leading tech company like Amazon would have conferred a degree of digital bona fides that has eluded us for decades. But Amazon’s reported decision to split the prize between two cities means the winners will get secondary outposts that provide a nice economic pop, but none of the stature that comes with a headquarters.
What’s more, Chicago already has plenty of outposts. In recent years, a parade of big-name tech companies has set up major operations in Chicago. Google, Facebook and, most recently, Salesforce are bringing thousands of well-paid technology jobs to Chicago. Out-of-town tech firms keep coming, often without demanding any government subsidies in return, drawn by Chicago’s unique combination of plentiful talent, world-class cultural amenities, top-flight educational institutions, global transportation connections and relatively affordable housing.
What Chicago doesn’t have is a technology flagship, one of those companies like Apple or Microsoft or Oracle that dominate a major technology market. We’ve had many successful tech startups—Cleversafe, Braintree and Fieldglass come immediately to mind—but they always seem to sell out to one of those “platform companies” we lack. Technology flagships generate billions in revenues, employ thousands and spawn ecosystems of innovation. Equally important, a platform company would signal Chicago’s arrival as a major league technology player, helping the city attract talent and investment dollars from around the world.
An undivided second headquarters of Amazon would have been a genuine technology flagship, instantly establishing the winning city as a nerve center of one of the most dominant players in tech today. Now there will be no second headquarters. Seattle is Amazon’s only headquarters and will remain so for the foreseeable future.
The economic jackpot will be smaller, too, bringing each winner about half as many jobs as originally expected. Sure, 25,000 tech jobs over an undefined time horizon would generate significant value, assuming they materialize. But Amazon’s last-minute switcheroo is an important reminder that the online retail behemoth makes no guarantees. Everything the company says today is subject to change tomorrow. Perhaps it will decide to split “HQ2” four ways, or eight, or 16.
Of course, Amazon is well within its rights to adjust future plans as it sees fit. Similarly, contending cities—as of this writing, Chicago isn’t officially out of the running—have no obligation to stand by their original incentive offers. Amazon has changed the terms, and cities are free to do the same. In light of Amazon’s demonstrated willingness to reduce its commitment, cities should take extra care to tie subsidies and other handouts to jobs actually created, rather than jobs merely promised.
News reports indicate Amazon has settled on northern Virginia, outside Washington, D.C., and New York City as winners of the competition that has transfixed business and government leaders for more than a year. Perhaps a secondary outpost of a big tech company counts as a big win for those locales. For Chicago, it’s no great loss.
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