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Cities, not Congress, are clipping Big Tech's wings

 Illustration of a drone being clipped by scissors.
Illustration: Aïda Amer/Axios

Big tech companies like Alphabet and Amazon are finding that the most active efforts to rein them in are coming not from Congress but from the cities they want to call home.

Why it matters: Major cities have experienced the bulk of the tech industry's growth. That's brought jobs and wealth, as well as gentrification and skyrocketing housing prices.

What's happening: “All the action is in the cities,” said Bradley Tusk, a prominent campaign operative who now invests in and advises startups, in an email.

  • Activists, unions and lawmakers in New York managed to drive out Amazon’s HQ2, which they said would lead to gentrification in Queens.
  • Last year, Google pulled back on plans to develop a startup incubator in Berlin's Kreuzberg neighborhood after activists said it would lead to gentrification, among other concerns.
  • Toronto-ites have expressed privacy concerns about Alphabet subsidiary Sidewalk Labs’ proposed data-hungry smart city along the city’s waterfront. And critics assail its proposal to develop an even larger area of land in return for a cut of taxes once that first project is complete.
  • Seattle’s city council passed a new business tax last year before reversing course under pressure from companies including Amazon.
  • City governments have also been at the forefront of pushing back against services bringing the sharing economy model to homes (Airbnb), to cars (Uber and Lyft), and to scooters (Bird and Lime).

The big picture: Some cities have existing political structures, including unions, that can mobilize against rapid corporate expansion. Many companies haven't needed the grassroots capability to combat that until now.

  • Kathryn Wylde, president of business coalition Partnership for New York City, which has urged Amazon to reconsider pulling HQ2 out of Queens, argued that the backlash was driven by politically-savvy forces taking advantage of community anxieties.
  • “I think there are organized political interests,” she said. “I don’t think the communities are necessarily political, but they are fearful and resentful in some cases and don’t see a chance for themselves in the tech world because they don’t have those skills, their kids aren’t learning those skills in school.”

Yes, but: Many communities vocally protect their values and priorities regardless of the business interests involved. And some firms have successfully navigated growth without a backlash, including Google in New York.

  • “The local debates are around local issues, and some of those are currently front of mind because of the role that the growth of technology companies has played, but in most of those cities those don’t have anything to do with tech,” said Julie Samuels, head of the industry advocacy group Tech:NYC.
  • Corey Johnson, speaker of New York City Council and a critic of Amazon's HQ2 project, said he welcomes tech firms, but "[w]e would hope that all tech companies would try to be good neighbors, be willing to work with the community when they explore locating here, and follow reasonable and smart data driven regulations."

What to watch: The fight in Toronto is in full swing. Sidewalk Labs spokesperson Keerthana Rang said "robust" public debate will allow it to present the best plan, "after which it will be up to Toronto to decide whether to move forward and implement it."

  • Opponents see hope in other cities' success.
  • "It seems to me that if Big Tech gets kicked out of places like Berlin and gets kicked out of places like New York, Toronto should not be afraid to say no to proposals like the Sidewalk Labs proposal that Google is offering up here," said Thorben Wieditz, one of the organizers of the Block Sidewalk coalition against the project.