Amazon Launches HQ2 Bidding War—238 Cities Compete to Offer Billions in Subsidies

Amazon announced in September 2017 that it would build a second headquarters (HQ2) equal to its Seattle campus, sparking a bidding war among 238 North American cities desperate to win 50,000 promised jobs. Cities competed to offer the largest subsidy packages—with bids averaging $6.75 billion from states and $2.15 billion from cities—while providing Amazon with detailed proprietary data on infrastructure, real estate, demographics, and economic development plans. The spectacle represented corporate welfare extraction at industrial scale, with cities racing to beggar themselves while enriching one of the world’s most valuable companies owned by the world’s wealthiest individual.

The HQ2 Request for Proposals

In September 2017, Amazon issued a Request for Proposals (RFP) seeking to identify a second headquarters city. The RFP specified requirements including:

Amazon’s Demands:

• 8 million square feet of office space (with room to expand to 12 million)
• Capacity for 50,000 high-paying jobs
• Metropolitan area with more than 1 million people
• “Stable and business-friendly environment”
• Quality of life that would attract and retain strong technical talent
• Direct flights to Seattle, New York, San Francisco, and Washington D.C.

What Amazon Offered:

• Promise of $5 billion in capital investment over 15-17 years
• 50,000 jobs with average compensation exceeding $100,000
• Additional indirect economic activity from construction and services

The Deadline: Cities had until October 19, 2017 to submit detailed proposals.

The Unprecedented Response: 238 Cities Compete

By the October deadline, Amazon received 238 proposals from cities across North America:

Geographic Scope:

• 43 U.S. states
• District of Columbia
• Puerto Rico
• 7 Canadian provinces
• 3 Mexican states

The Scale of Competition: More than 200 metropolitan areas—representing the vast majority of North American cities with populations exceeding 1 million—entered the competition. Cities treated the Amazon HQ2 contest like an Olympic bid, mobilizing mayors, governors, economic development agencies, and civic leaders.

The Subsidy Arms Race

Based on publicly-available bids from the 20 semi-finalists announced in January 2018, the scale of subsidy offers was staggering:

Average Subsidy Offers:

• State incentives: $6.75 billion over 15 years
• City/local incentives: $2.15 billion over 15 years
• Combined average: Nearly $9 billion per bid

Specific High-Value Bids:

• Maryland: $8.5 billion in tax incentives and infrastructure
• New Jersey: Up to $7 billion in incentives for Newark
• Chicago: Multibillion-dollar bid including free land worth up to $100 million
• Washington D.C.: $600 million to $1.2 billion over 10-15 years
• Philadelphia: Estimated $3-5 billion package

Creative Subsidies: Cities competed not just on dollar amounts but on creative perks:

• Free land and infrastructure
• Property tax abatements lasting decades
• Personal income tax rebates for Amazon employees (effectively allowing Amazon to pocket worker taxes)
• Sales tax exemptions
• Dedicated highway exits and transit expansions
• Expedited permitting and zoning changes

The Data Extraction Scam

Beyond financial subsidies, the HQ2 process functioned as a massive data extraction operation:

Information Amazon Demanded: Cities were required to provide detailed data on:

• Available real estate and development sites
• Infrastructure capacity and planned improvements
• Tax structures and economic development incentives
• Demographic data on workforce and education
• Quality of life metrics and cultural amenities
• Transportation networks and planned expansions
• Utility capacity and telecommunications infrastructure

The Value to Amazon: This proprietary information had enormous value for Amazon’s business operations beyond HQ2:

• Warehouse siting: Data on real estate, transportation, and labor markets informed Amazon’s logistics expansion
• Competitive intelligence: Information on cities’ maximum subsidy offers established benchmarks for future negotiations
• Political leverage: Understanding each city’s priorities and constraints provided negotiating advantages
• Free consulting: Cities essentially paid to research and present development opportunities for Amazon

No Compensation: Cities spent millions preparing bids—hiring consultants, conducting studies, producing marketing materials—and received nothing in return except the remote possibility of “winning” the right to subsidize Amazon.

The Race to the Bottom Dynamic

The HQ2 bidding war exemplified the destructive race-to-the-bottom dynamics of corporate welfare:

Prisoner’s Dilemma: Each city faced a choice:

• Offer massive subsidies and possibly win HQ2
• Refuse to compete and definitely lose HQ2
• But if all cities refused subsidies, Amazon would still have to pick a location

Why Cities Couldn’t Coordinate: Congressman Ro Khanna proposed that the 20 finalist cities collectively bargain with Amazon, refusing to bid against each other. This would have eliminated the race to the bottom. But:

• Cities feared others would defect and offer larger subsidies
• Political incentives pushed mayors and governors to “win” regardless of cost
• Amazon controlled the process and could punish coordination attempts
• No legal framework existed for cities to collectively bargain with corporations

The Predictable Outcome: Amazon played cities against each other, extracting maximum subsidies while retaining full control over the final decision. Cities that offered the largest subsidies didn’t necessarily win, demonstrating that Amazon valued other factors—but the bidding war ensured those factors came with maximum public subsidy.

Significance: Corporate Welfare as Kleptocracy

The Amazon HQ2 bidding war represented corporate welfare extraction at a scale and visibility previously unseen:

Public Subsidy for Private Wealth: Cities competed to transfer billions in taxpayer money to a company that:

• Had paid zero federal income tax in 2017 despite $5.6 billion in profits
• Was owned by the world’s richest person (Jeff Bezos, worth over $100 billion)
• Generated massive profits that could easily fund its own expansion
• Already extracted billions in subsidies for warehouses and data centers

The Wealth Transfer: Every dollar in subsidies was a dollar that could have funded:

• Public schools and education
• Infrastructure maintenance and expansion
• Affordable housing
• Healthcare and social services
• Tax reductions for residents and small businesses

Instead, these public resources were transferred to Amazon shareholders, primarily Jeff Bezos.

The Corruption of Economic Development: The HQ2 process revealed how thoroughly corporate welfare had corrupted local economic development:

• Cities couldn’t refuse to compete without political backlash
• Mayors and governors faced incentives to “win” regardless of cost-benefit analysis
• Economic development agencies existed primarily to subsidize corporations
• Public participation and democratic accountability were eliminated
• Cost-benefit analyses were manipulated to justify predetermined conclusions

The Spectacle as Distraction

The HQ2 bidding war functioned as elaborate political theater that distracted from fundamental questions:

Questions Not Asked:

• Should Amazon pay zero federal income tax?
• Should the world’s richest person receive billions in subsidies?
• Should cities compete against each other to subsidize corporations?
• What could cities accomplish if they coordinated instead of competed?
• What democratic accountability exists over corporate welfare decisions?

Questions That Dominated:

• Which city will win?
• How can our city’s bid stand out?
• What creative incentives can we offer?
• How many jobs will Amazon create?

The spectacle itself became the story, normalizing the underlying corruption of public subsidy for private wealth accumulation.

Media Coverage: Missing the Story

Coverage of the HQ2 bidding war largely treated it as a competitive sport rather than as institutionalized corruption:

The Washington Post (owned by Jeff Bezos) extensively covered the HQ2 process but primarily from a business and local interest angle. The Post ran articles on:

• Which cities were competitive
• Creative elements of various bids
• Economic impact estimates
• Quality of life comparisons

What the Post Largely Avoided:

• Systematic critique of corporate welfare
• Analysis of Bezos personally profiting from subsidies
• Investigation of Amazon’s zero federal tax payments
• Examination of race-to-the-bottom dynamics
• Democratic accountability questions

Other Media: Mainstream business media similarly treated HQ2 as a fascinating competitive process rather than as kleptocracy. Only progressive outlets like In These Times explicitly framed the bidding war as a “scam” and wealth extraction.

The January 2018 Shortlist

In January 2018, Amazon announced a shortlist of 20 cities, issuing a nearly 30-page request for additional information. The shortlist process intensified the competition, with finalist cities preparing even more detailed proposals and sweeter subsidy offers.

The announcement would come in November 2018, but the real winner was already clear: Amazon had successfully extracted billions in subsidies, proprietary data from 238 cities, and massive positive media coverage—all while paying zero federal income tax and making its founder the world’s wealthiest person.

The HQ2 bidding war demonstrated that American federalism—with cities, states, and the federal government unable to coordinate—had created a system where corporations could play jurisdictions against each other, extracting maximum public subsidy while contributing minimum tax revenue. Democracy dies in darkness, but corporate welfare thrives in the spotlight of civic competition.