Your Tax Dollars Built Big Tech
Subsidies helped Apple, Amazon, Google and Facebook become so dominant.
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The CEOs of four of America’s major tech companies — Google, Apple, Facebook, and Amazon — will be testifying before the antitrust subcommittee of the House of Representatives on Wednesday as part of an ongoing investigation into the market power corporations have online.
These four have come to dominate various areas of the economy — online search, apps, social networking, online shopping, and more — through a variety of tactics that America’s weak slate of antitrust enforcers let slide. (Check out this primer on Amazon that I helped write, to get a sense of the sort of stuff I’m talking about.)
And you’ve helped them along the way. So have I. These four corporations have collectively benefited from at least $5,059,554,674 in support from state and local governments. And that’s likely an undercount, since many state and local subsidies aren’t disclosed.
This money has lowered their cost of doing business vis-a-vis their competitors, especially smaller businesses, giving the big four cheaper land and lower local tax rates, and providing them with free money to expand their networks, make acquisitions, or lobby lawmakers in order to entrench their dominance. Every dollar granted to them by a state or local government is one more dollar they have to bury the competition, which likely didn’t receive a similar dollar from the public coffers.
Below is a quick rundown of the support each corporation has received from local governments — which doesn’t take into account their tax dodging or preferential loopholes at the federal level — and a few highlights regarding what they did with our money. All data is from the Good Jobs First Subsidy Tracker.
Google (or Alphabet, as the parent company is now called) has received at least $882,970,218 in state and local subsidies dating back to at least 2005. The largest grant was $360 million for a data center in Oregon that year. About $3 million went to a company called DoubleClick, which Google acquired in 2008 as the first step in what would become a rollup of the digital advertising industry, which Google now largely controls, very much to the detriment of the newspaper business.
Facebook has received at least $374,168,107 from state and local governments dating back to at least 2010. The largest grant was $150 million for a data center in Utah, followed closely by $147 million for a data center in Texas. As many tech companies do, Facebook attempts to hide this largesse by using shell companies or subsidiaries that sound like innocuous tech-y businesses, such as Siculus Inc. or Vitesse LLC.
Amazon is the big one, having received at least $2,982,000,000 — yep, that’s billions — dating back to at least 2000. The largest chunk is $750 million it received from Virginia for that state’s share of the much ballyhooed Amazon HQ2. But most of the money went toward helping Amazon expand its warehousing and distribution network, which as I’ve explained before, is literally paying the company to do what its going to do anyway, since that network is key to both its current business and future plans. Amazon’s total also includes hundreds of thousands of dollars in subsidies for both Zappos and Whole Foods, both of which Amazon acquired.
Apple has received at least $820,690,826 dating back to at least 1997. The largest grant was $321 million from North Carolina for, you guessed it, a data center. North Carolina gave Apple six different incentive packages between 2009 and 2016. A 1997 deal cut Apple cut with California, when the company was on the brink of bankruptcy, has provided $70 million so far, but doesn’t expire until 2033, so the total is going to keep on climbing.
In nearly every instance, incentives have nothing to do with where a company ultimately decides to open new facilities or make new investments. So it’s unlikely that the vast bulk of this largesse influenced these companies in any major way.
What it did do, though, was give the big four a leg up over their competitors, freeing up money that they could use elsewhere to entrench their advantages — or simply buy up potential competitors before they posed a real threat.
While lawmakers can’t go back and undo most of these giveaways, they can pledge to stop making the problem worse. If locales insist on using tax incentives, there’s no excuse for providing them to the biggest of the big rather than smaller, local businesses, since smaller firms provide benefits to local economies that large, multinational corporations simply can’t.
We’ll see if Wednesday’s hearing provides anything useful. But one thing is for sure: The big tech CEOs can thank you for helping them get to the witness table.
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One more thing: Tesla has made it official: Austin, Texas, will be the site of its next factory, for which it will receive more than $60 million in local tax incentives. You can catch up on my coverage of this — and why I’m skeptical it will be a good deal for Austin — here, here, and here.
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— Pat Garofalo