King of The Hill: How Amazon and Jeff Bezos made Washington a second home
In just about every direction, the White House is surrounded by e-commerce giant Amazon and its CEO Jeff Bezos.
Almost due west from the executive mansion is Amazon Books, a brick-and-mortar version of its e-commerce destination. The $23 million mansion owned by Amazon CEO Jeff Bezos is a 15-minute drive to the northwest. The Washington Post, owned by Bezos, is a short walk to the northeast. Amazon’s Washington headquarters is just to the east.
Head a bit farther south across the Potomac River into Virginia and there’s Crystal City, soon to be renamed “National Landing” once Amazon makes it home to its massive second headquarters, or HQ2, investment.
Even beyond that, the outskirts of the city — a northern Virginia area that has been described as “the bull’s-eye of America’s internet” — is home to 29 of the company’s 35 Amazon Web Services data centers. On a map, it can look like a pending invasion of the nation’s capital.
But Amazon is already deeply embedded in Washington and has plans to further entrench itself in the nation’s capital, putting it close to power brokers as well as billions of dollars in government contracts. While major tech companies have ingrained themselves in the capital in recent years, none are as present as Amazon, according to policy and lobbying experts who spoke to NBC News.
Many companies have cozied up to Washington, but none have accrued the kind of presence and reach that Amazon will soon boast. And with good reason. Amazon’s government interests expand well beyond lobbying. It is now facing growing calls to be broken up by the federal government while also bidding for billions of dollars worth of government contracts.
"I think they see there is a lot of profit to be made in government contracts and want to be part of that," said Frank Pasquale, a University of Maryland law professor. "Maybe some of the Amazon executives in the area will end up going to the same country club as antitrust or tax policymakers and end up offering jobs or internships to bureaucrats or political appointees' kids, or engage in similar soft corruption."
"There are a lot of opportunities for influence once you get your own people insinuated into the elite clubs, schools, and other social venues in D.C."
Prime real estate
Amazon's Washington operation is headlined by the upcoming arrival of HQ2, which the company opted to place in the area after what amounted to a nationwide competition.
Amazon initially announced a separate second headquarters in New York City, but withdrew amid political pressure over subsidies the state had offered to lure the company. As a result of HQ2, Amazon has pledged to deliver 25,000 new jobs in the Virginia area over the next decade.
David Fontana, a George Washington University law professor, said the company was making fairly standard moves early on — building up a lobbying presence and hiring Washington insiders "to do D.C. work."
But with HQ2, the company is bringing the business side of their operation in as well. As he put it, "there's nothing like" the influx of private sector jobs Amazon is planning in the nation’s capital in the city's history.
"That's a big line to cross," Fontana said.
An Amazon spokesperson said the company decided to locate "in Virginia" because of the state’s "business-friendly environment" and its belief that it will be able to attract "world-class talent" to the area.
"Its proximity to D.C. did not influence our HQ2 decision," the spokesperson said.
'A little scary'
When it comes to lobbying, Amazon lobbied more government entities than any tech company last year, Bloomberg reported. So far in 2019, it's spent more on lobbying than any tech company, at more than $8.1 million, after spending a record $14.4 million in 2018, according to The Center for Responsive Politics.
As Bloomberg noted, Amazon has increased its lobbying spending by more than 460 percent since 2012 while the company's roster of in-house lobbyists has nearly tripled since 2015. The company has lobbied the government on an array of issues, like taxes, trade, immigration and defense.
While Amazon's lobbying efforts are expansive and growing, they are comparable to companies like Facebook, Northrop Grumman and AT&T. And though Amazon's expansion into the Washington market will outpace other private sector employers, defense contractors and other large businesses have populated the land between the Anacostia and Potomac Rivers for some time, viewing the nation’s capital as essential to their core business.
"Amazon provides a wide range of products and services for our customers, and we’re always looking for ways to innovate on their behalf," an Amazon spokesperson told NBC News. "Our Washington, D.C., team is focused on ensuring we are advocating on issues that are important to our customers, our employees and policymakers."
But Amazon isn’t quite comparable to other companies, according to Terry Schilling, executive director of the American Principles Project, a conservative think tank.
"I don't think I've ever seen a corporation, like a single corporation, have this type of impact and influence on public policy from a federal all the way down to a state and local level," Schilling said. "And it's very impressive and a little scary."
For Amazon, what's at stake
What does Amazon care about? For starters, getting government agencies to use its cloud computing services and buy supplies from its site, observers say.
The company dove headfirst into the government contracting competition, most prominently seeking a cloud computing contract with the Pentagon worth up to $10 billion, after having locked down a similar, slightly less-lucrative contract with the CIA earlier in the decade.
But that contract has also shown that some politicians are growing wary of Amazon's power. Last month, Defense Secretary Mark Esper launched a review of the bidding process after Amazon's competitors like IBM and Oracle complained that the terms for the contract were unfairly designed to benefit Amazon, a claim that a federal judge and the Government Accountability Office ruled against. That also came after the White House demanded such a review — something that leading Republicans on Capitol Hill like Sen. Marco Rubio, R-Fla., have pushed for as well.
Rubio wrote Esper multiple times on the subject and, as one senior Senate aide told NBC News, has been aggressively lobbying fellow senators to further scrutinize the contract. A Rubio spokesperson told NBC News that the senator spoke to Trump and national security adviser John Bolton about the contract, and his staff has worked with the Defense Department on the issue prior to its announcement of a review. Of note, billionaire Oracle co-founder Larry Ellison donated millions to Rubio's presidential campaign.
An Amazon spokesperson called the claims of unfairness "meritless and a desperate attempt to distort the facts," pointing to the federal court ruling.
That battle might pale in comparison to other headwinds the company may face depending on the results of the next presidential election. While Trump has repeatedly taken aim at the company because of Bezos' ownership of The Post, other 2020 contenders like Sen. Bernie Sanders, I-Vt., who has also been critical of The Post/Bezos nexus, and Sen. Elizabeth Warren, D-Mass., have discussed breaking up the company. Meanwhile, the Federal Trade Commission and Department of Justice are currently investigating Amazon for possible antitrust violations.
And, should a Democrat win the White House in 2020, there's likely to be increased scrutiny over the rules that allow Amazon to avoid paying federal income taxes.
"Look, when you are the biggest retailer on the planet, there's going to be some overlap on the government stuff, and it also puts these huge bull's-eye on you," said one Washington insider who spoke on the condition of anonymity because he counts Blue Origin, Bezos' space exploration company, among his clients. "Walmart's probably sitting back saying, 'Oh thank, God," because, it used to be everybody trashed Walmart."
While Amazon is often grouped in with fellow tech giants like Facebook and Google in terms of the scrutiny it receives, Matt Stoller, a fellow at the Open Markets Institute, a liberal think tank that has long urged much tougher regulation of the big tech companies, said Amazon is in a unique position to influence Washington.
"Now you have the richest man in the country running one of the biggest companies in the country, owning The Washington Post and bringing massive numbers of employees to D.C.," Stoller said. "That's really breaking down a wall that has existed since the founding of the country, which is that we keep our business centers and our political centers separate."