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Jan 23, 2018
Toronto’s Reputation as Leader in Tech Sector Reinforced as the Lone Canadian City to Make Amazon’s Short List for HQ2
Toronto region is the only Canadian bidder to have made the shortlist for Amazon’s second headquarters. Last week, Amazon announced the much-anticipated shortlist of candidates to be considered for the home of “HQ2,” Amazon’s newest base of operations. The e-commerce retailer entertained bids from 238 cities and metropolitan areas in North America, including several in Mexico and eleven in Canada. The Toronto region’s bid was the only Canadian one to make the cut.
Toronto region’s bid was backed by substantive measures from the Ontario government, which has committed to increasing funding for STEM and AI education. The bid was also endorsed by Toronto Mayor John Tory and Prime Minister Justin Trudeau. Those who advocated for the bid are thrilled by the news. The decision is “outstanding news for Toronto,” declared Economic Development Minister Steven Del Duca. Notably, unlike many other bids, Toronto did not include any specific subsidies or tax breaks in its bid.
The potential benefits of winning the bid are enormous: Amazon plans to invest more than US$50 billion into the construction and operation of HQ2, and the project is anticipated to create approximately 50,000 jobs in and around the winning city.
Critics, however, are concerned that HQ2 has the potential to harm rather than help Toronto’s tech sector – especially when it comes to newer businesses and startups. As we have previously discussed on this blog, the introduction of the Amazon behemoth would be immediately and unavoidably disruptive to the current tech industry landscape. Increased competition for Toronto’s already in-demand talent pool could possibly increase the cost of labour for small startups, many of which already have challenges compensating employees. Though proponents of the bid argue that the arrival of Amazon would create an influx of new talent into the city, critics point out that it could also lead to a scarcity of resources that are crucial for smaller competitors.
Much is unknown at this point: experts are struggling to identify any trends in Amazon’s shortlist, a list that includes cities across the continent from a variety of different geographical regions. Boston, L.A., Denver, Austin, Atlanta, Miami, Chicago, New York and Philadelphia have all been chosen for the shortlist. What is known, however, are the effects of Amazon’s original headquarters, a decision that “changed the character of its native Seattle, setting in motion a building boom and rising rents.” Making the HQ2 shortlist reinforces Toronto’s reputation as a leader in the technology industry, but whether the arrival of HQ2 will be a positive change for our startups remains to be seen.