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Negotiations tech companies and city officials undertake before opening new offices or datacenters have long been held behind closed doors. But that secrecy is increasingly becoming a point of contention, as evidenced by Amazon’s recent decision to abandon plans for a big New York City campus, in part due to backlash over how tight-lipped the ecommerce giant was in negotiating an incentive package with the city and state of New York.
New documents obtained by the Washington Post show Amazon is not the only company that favors secrecy — Google has also used confidentiality agreements in its bids to secure land for datacenters, even going so far as to create shell companies for the purposes of negotiation. The documents were first acquired by a group called Partnership for Working Families, which is suing San Jose, California over nondisclosure agreements the city has signed with Google.
The report comes after Google announced this week that it plans to invest $13 billion in expanding and opening new datacenters and offices across the U.S.
According to the paper, Google used shell companies in negotiations with at least five cities where it later built datacenters. Sometimes Google used multiple shell companies and employed code names while negotiating with local officials to avoid revealing it was behind the project until months into negotiations. The Washington Post details how this process worked, as discovered through documents and an interview with Larry Barnett, president of an economic development organization in Midlothian, Texas, where Google built a datacenter.
In Midlothian, for example, Google created Sharka to negotiate the tax-abatement and the site plans, and used a separate Delaware company, Jet Stream LLC, to negotiate the land purchase with a private owner. In Iowa, Google created Delaware-based Questa LLC for the land sale and Gable Corp. for the development deal.
When Google’s representatives first approached Midlothian in 2016, they used a code name that was not the same as either of the subsidiaries, Barnett said. (He declined to say what it was.) Google also asked Midlothian officials to sign a confidentiality agreement before they knew the developer’s identity, Barnett said. He said Google revealed its identity a year later, as the deal approached.
Google spokesperson Katherine Williams defended the company’s actions in a statement to the Washington Post, saying that Google employs “common industry practices.”
“We believe public dialogue is vital to the process of building new sites and offices, so we actively engage with community members and elected officials in the places we call home. In a single year, our datacenters created $1.3 billion in economic activity, $750 million in labor income, and 11,000 jobs throughout the United States,” Williams’ statement read.
Other tech companies, including Apple, Facebook, Microsoft, and Amazon, often require secrecy for at least some portion of the process when negotiating land deals for new space, including for datacenters. Because of this, it’s difficult to say how much more or less secretive Google is compared to other companies. Apple and Microsoft, for example, have also used code names when negotiating with local officials in municipalities where the companies intended to build datacenters. In 2016, Facebook used a shell company called Greater Kudu LLC in negotiations for a datacenter in New Mexico. In that case, the company behind the development also wasn’t revealed to city council officials until late in the approval process.
But what’s passed for common industry practice in the past may not continue to fly, especially as local groups have gotten more vocal in protesting tech company developments, like Amazon’s proposed campus in New York City. There, city council meetings that Amazon officials attended were frequently interrupted by protests from pro-union groups.
Another instance in which Google appears to differ from competitors is that in some municipalities where it has built datacenters, it has claimed information about how much energy and water the datacenters use is a trade secret. This irked an environmental advocacy group in South Carolina that has been trying to get information about how many gallons of water a Google datacenter in Berkeley County has been using.
What the group does know is that the Google-created entity that owns the datacenter is among the 10 companies using the most water in the county. Annual water usage of at least some Facebook and Apple datacenters has been revealed in the past, based on a quick search of local news articles.
VentureBeat has reached out to Google for additional comment and will update this story if we hear back.
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