Amazon's Long Game Is Clearer Than Ever
By Matt Taibbi, Rolling Stone
15 November 18
Why bother with these middling steps in between? Let's just fast-forward to
the inevitable Amazon-led oligarchy
The Washington Post seemed happy about Amazon's decision to divide its new
headquarters between New York and Crystal City, Virginia, outside of D.C.,
noting the amazing benefits both communities will receive by the arrival of
the web-retail behemoth. The company expects to create 25,000 jobs in
Northern Virginia by 2030, and generate $3.2 billion in tax revenue, in
addition to investing $2.5 billion.
Who better to trumpet the virtues of this job-creating, capital-investing
deal than the richest person in modern history, Amazon CEO Jeff Bezos? He
sounded pleased as heck to be part of all the wonderfulness.
"We are excited to build new headquarters in New York City and Northern
Virginia," Bezos told the Post - which he owns - adding: "The team did a
great job selecting these sites, and we look forward to becoming an even
bigger part of these communities."
Rather quickly after the "HQ2" announcement was made, MarketWatch ran a
piece pointing out that moving to Northern Virginia might have other
benefits for Amazon: HQ2 in the D.C. area could help Amazon snag a $10
billion Pentagon contract.
Yes, the company has increased the odds that it will be awarded one of the
all-time lucrative defense deals, the $10 billion Joint Enterprise Defense
Infrastructure (JEDI) contract, providing cloud services and a platform for
Department of Defense operations, instantly becoming one of the biggest
federal contractors.
The deal has been a source of controversy for a while. In July, a pair of
Republican members of Congress, Steve Womack of Arkansas and Tom Cole of
Oklahoma, sent a letter to Glenn Fine, acting Inspector General of the
Defense Department. In it, they claimed the contract was essentially
pre-delivered to Amazon.
Among other things, the JEDI award can only go to a provider that meets
Defense Information Systems Agency Impact Level 6, a requirement that has to
do with security/secrecy clearances. "The highest level of cloud security"
is how one congressional source explained Level 6 to me.
Although the lawmakers did not single out Amazon, they did say only one
private provider meets that requirement, and numerous reports say that
provider is Amazon Web Services.
Vanity Fair ran a piece this past summer noting other deal requirements -
like a prerequisite of $2 billion in cloud revenue - ruled out all but a few
competitors.
"The deal appeared to be rigged in favor of a single provider," the magazine
wrote, adding that Amazon Web Services had ties to Trump Defense Secretary
James Mattis.
Amazon already had another recent win on the defense-contracting front with
the passage of the so-called "Amazon Amendment," which makes Amazon the
go-to portal for the government's online purchases. This was included in
last year's Defense Authorization Bill. That amendment will cover $53
billion in annual government purchases, enriching the firm even more.
Having an auction on the scale of the JEDI deal with only one qualified
bidder sounds more like the contracting style of Belarus or Indonesia than
the United States. One wonders if that played a role in Amazon picking
Crystal City and its $573 million in tax incentives over, say, Newark, which
prostrated itself by offering $2 billion.
Did the initial Post story mention that Amazon might be getting back a $10
billion "prize" itself in this deal? No. Wasit a surprise that the first
person the Post quoted was its owner? Probably not. Obviously no one from
Amazon is running into their newsroom with a red pencil in hand, but
everyone knows who signs their checks, and the gravitational pull of
ownership can have a way of shading coverage over time - which is a
especially problematic in this case.
If the main news source is owned by Amazon's CEO, and Amazon is
simultaneously a major private contractor to the most secretive and powerful
agencies in federal government, that doesn't exactly feel like the
Jeffersonian ideal for America's capital city.
"News consumers need separation of press and state," says Jeff Cohen,
founder of the press watchdog FAIR (Fairness and Accuracy in Reporting).
"It's dangerous when the Post does not regularly inform readers that its
owner's company is intertwined financially and logistically with the CIA."
Reached for comment, a spokesman for the Post tells Rolling Stone, "As Jeff
[Bezos], Marty [Baron], Fred [Hiatt] and others have stated over the years,
The Post's newsroom is independent. Decisions are made by Marty and his
team, no one else."
The paper ran another piece Tuesday night stressing that Amazon didn't have
the JEDI bid sealed up and that the company was merely the "first" to meet
key bid guidelines. "The company may beat out Microsoft, IBM and Oracle,"
the paper wrote.
The HQ2 move also had huge tax implications. Amazon in one fell swoop seems
to have more than doubled its existing subsidies.
The Good Jobs Institute had Amazon's pre-HQ2 number at $1.6 billion in
American tax breaks nationwide, at over 150 locations. In HQ2 alone it
scored over $2 billion: $1.5 billion in New York, and just over half-billion
in Crystal City.
To give an example of how much money that is: The Virginia offices promise
to create 25,000 jobs in return for that $573 million in tax breaks. That
works out to about $22,000 in incentives per job. The deal with New York is
sweeter.
The contract even obligates the state to secure access to a helipad for Team
Bezos. This is the "just to be dicks, we'll ask for this" provision, like a
rock band demanding a jar of green M&Ms at the end of a whopper gate-receipt
deal.
To recap: a company whose profits soared 27 percent to $3.03 billion last
year just received an additional $2 billion or more in tax breaks, and may
also be in line for $10 billion more in tax money through the JEDI deal.
Bezos is personally worth over $150 billion, some $55 billion more than Bill
Gates. Bezos' net worth fluctuates about the size of the GDP of Burundi
every time someone sneezes at the NYSE.
This is the same company that had to be hounded into agreeing to a $15
minimum wage. It only folded after Sen. Bernie Sanders threatened to tax it
for state welfare payments to its employees. That the more standard official
treatment of this company is the gushing handover of tax relief says a lot
about the role of government in modern America.
Amazon last year effectively paid nothing in federal tax. Worse, thanks to
the tax cut approved by Donald Trump, who ironically has ripped Amazon for
not paying taxes, the company will reportedly receive a one-time $789
million windfall for last year - in addition to the goodies it just received
this week.
Deals like this are the result of years of gradual breakdowns in oversight,
allowing officials like New York Governor Andrew Cuomo to essentially
negotiate unilaterally. They are dangerous for the same reasons the
financial bailouts after 2008 were dangerous: They make the government a
long-term partner with giant, hyper-concentrated corporate entities.
No population genuinely worried about abuses of power would even countenance
placing a single private company in control of securing the data of both the
intelligence community and the armed services. Add putting a major media
organ or two under the same umbrella and you're beginning to enter oligarchy
territory.
Moving Amazon closer to America's political and financial capitals isn't
just about creating a few jobs. It's also a symbolic move that speaks to the
unsettling co-mingling of state and corporate power. We might wake up soon
and wish we hadn't put so many eggs in one basket.
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