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Documents show how Google used shell companies to keep datacenter negotiations quiet


The negotiations between tech companies and cities to open new offices and/or data centers have long been held behind the scenes. But that secrecy is proving to be an increasing point of contention, as evidenced this week by Amazon’s 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.

Now, new documents obtained by the Washington Post show that Amazon’s not the only company that favors secrecy — Google has also used confidentiality agreements in its bid 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 non-disclosure agreements the city has signed with Google.

The report comes after Google announced this week that it planned to invest $13 billion in expanding and opening new datacenters and offices across the U.S.

According to the Post, Google used shell companies in negotiations with at least five cities that it ended up building datacenters in. Sometimes, it used multiple shell companies, and negotiated with local officials using code names to avoid revealing it was Google behind the project until months into negotiations. Here’s how they did it, according to the Post, as discovered through documents and an interview with Larry Barnett, president of an economic development organization in Midlothian, Texas, where Google ended up building 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.

The story also includes links to non-disclosure agreements Google made officials sign in a number of cities, including Boulder, Colorado, San Jose, and Clarksville, Tennessee.

Google spokeswoman Katherine Williams defended the company’s actions in a statement to the 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 data centers created $1.3 billion in economic activity, $750 million in labor income, and 11,000 jobs throughout the United States,” Williams’ statement read.


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Other tech companies, including Apple, Facebook, Microsoft, and Amazon, often require secrecy for at least some duration of the process when negotiating land deals for new space, including for datacenters. Because of that, it’s difficult to say how much more or less secretive Google is compared to other companies. Apple and Microsoft, example, have also used codenames in the past when negotiating with local officials in municipalities they intend to build datacenters in. 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 practices in the past may not continue to, especially as local groups have gotten more vocal about protesting tech company developments, like Amazon’s proposed campus in New York City. There, city council meetings that Amazon official attended were frequently protested by pro-union groups.

There is another instance where Google appears to differ from competitors: in some municipalities where it’s built datacenters, Google has declared information about how much energy and water the datacenters use as a trade secret. That’s irked an environmental advocacy group in South Carolina, which has been trying to get information on how many gallons of water a Google datacenter in Berkeley County has been using.

They do know, however, that the Google-created entity that owns the datacenter is among the 10 companies that use the most water in the county. The annual water usage of at least some Facebook and Apple datacenters have 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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