News | Strategy: Amazon just scored a major win in Seattle, and it shows HQ2 is already doing what it was likely designed to do (AMZN)

Strategy: Amazon just scored a major win in Seattle, and it shows HQ2 is already doing what it was likely designed to do (AMZN)

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  • Seattle's city council in May voted for a new tax on large employers in the city, but it now looks ready to repeal the tax before it takes effect.
  • Amazon was a vocal critic of the so-called head tax and said it would halt construction on two towers in the city center if it went through.
  • The quick about-face shows the power of Amazon and the advantages its HQ2 project is already offering the company.

Amazon was a vocal opponent of Seattle's new "head tax" from the start, and now it looks as if the company will get its way.

City leaders are looking to stop the tax before it's implemented, the Associated Press reported on Tuesday. Seattle's city council had approved an annual tax of about $275 for each full-time employee, and it was expected to take effect later this year. The so-called head tax was meant to raise millions in city funds to help fight homelessness in Seattle.

While Amazon was not the only company that lobbied against the tax, it was probably the most vocal. It paused construction on two massive towers it's developing in the city, resuming construction on only one of them after the vote passed.

"We are disappointed by today's city council decision to introduce a tax on jobs," the Amazon vice president Drew Herdener said in a statement after the vote passed. "While we have resumed construction planning for Block 18, we remain very apprehensive about the future created by the council's hostile approach and rhetoric toward larger businesses, which forces us to question our growth here."

He continued: "We are highly uncertain whether the city council's antibusiness positions or its spending inefficiency will change for the better."

The implication is clear: Amazon can continue its rapid growth elsewhere, outside Seattle, if it wants to.

Most businesses don't have much leverage against city government. Moving headquarters is a long, expensive, and lengthy process. But it isn't an empty threat for Amazon, which is planning a second headquarters.

Though the company's new headquarters, known as HQ2, is not even shovel-ready by any stretch of the imagination, the city council's about-face suggests it is already having a measurable impact on Amazon's relations with Seattle.

This impact was exactly what HQ2 was designed to do, at least, that is according to some experts closely observing the selection process. Some have said Amazon is trying to learn from its struggles in Seattle, where it views itself as a scapegoat for many of the city's ills.

Others have said the HQ2 selection process is meant to pit two city governments against each other, with the winner ultimately being the company's bottom line and future growth, as Glenn Fleishman writes in Fast Company.

Before Amazon has even selected the city that will host its HQ2, HQ1 is reaping the benefits.

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By Kwame Ntow 12/06/2018 11:59:00