An HQ2 fiasco, a multibillion-dollar divorce -- is Amazon's armor starting to show some cracks?
This week, Amazon (AMZN) was caught up in a relatively rare PR flap after it suddenly pulled the plug on its plan to build a new headquarters in Long Island City, Queens, writing in a statement that "the commitment to build a new headquarters requires positive, collaborative relationships with state and local elected officials who will be supportive over the long-term."
Politicians and activists who opposed the facility cheered Amazon's sudden exit as others bemoaned the loss of up to 25,000 jobs and associated tax revenues. But even before the decision to leave Queens, Amazon had been criticized for making its HQ2 search a "beauty contest" and a self-serving money grab.
So could the Queens debacle signal that the tide of public opinion is turning against Amazon?
"I think they got lucky, in that New York City looks so bad," said Allen Adamson, co-founder of Metaforce and a professor at NYU's Stern School of Business. "Most average consumers don't blame Amazon at all; they would say that New York got what it deserves."
Between New York City and New York state, Amazon had been offered $3 billion in a combination of tax breaks, performance incentives and grants to build the facility in Queens. But the conflicting responses by politicians and mixed public opinion on the tax incentives meant that the focus was more on New York's role, he suggested.
Compared to other tech giants, and major institutions, Amazon ranks very favorably on the scale of consumer trust. An October 2018 poll looking at Americans' confidence in its institutions found that Amazon was the most trusted company in the survey, ranking higher than Alphabet (GOOGL) and Facebook, and just below the U.S. military.
And as critics of the proposed Queens headquarters often pointed out, Amazon is also a multi-billion company whose CEO is the richest man in the world (to boot, one whose personal wealth is currently on display by way of tabloid reports about his divorce). And over time, people may view the HQ2 incident as one where Amazon could have been more open to negotiating, and used its wealth and power to be a good corporate citizen.
"When you get to be a certain size -- Apple (AAPL) , Facebook (FB) , Microsoft (MSFT) -- consumers' expectations increase from 'can you deliver a good product at a good price' to 'you should be doing more,'" argued Adamson. "Just hiring people isn't enough isn't enough for an iconic brand like Amazon."
Amazon -- and its founder -- are known for penny-pinching relative to their size and wealth -- one reason, perhaps, for the company's success. But as the company grows in size and power, penny pinching won't always cut it with the public -- and the sudden Queens pullout may come back to haunt Amazon's brand over the long term.
"They missed an opportunity to build perceptions of their corporate citizenship, which is going to be more important as they've gotten so colossal," Adamson added.