Google Uses Shell Companies, NDAs To Hide Its Tax Break Negotiations From Public
For years, Google has used anonymous LLCs to secure development deals and tax breaks with local officials, whom it then signs to broad nondisclosure agreements in an attempt to keep its role in negotiations secret for as long as possible, the Washington Post reports. The news comes days after Google announced a plan to spend $13B in 2019 on development across the U.S.
The tech giant used a shell company to negotiate a $10M tax incentive deal with officials of the Dallas suburb of Midlothian, Texas, to build a data center, the Post reports. Only once the project was officially approved by the town government was Google's identity as the data center's developer disclosed to the public.
The reaction of Midlothian residents and community groups was, on a smaller scale, akin to New Yorkers' outrage at the $3B incentive deal struck with Amazon. The $3B figure was only announced a week after Amazon's selection of Long Island City became known, and the uproar from citizens and local politicians alike drove Amazon to pull out of New York.
Even that reversal was only possible because Amazon announced its decision before any official documentation was signed, whereas Google's deals in Midlothian and elsewhere often left those outside local government with no recourse, according to the Post.
New York also is the biggest city in the U.S., with all the influence that comes with it. The resource gap between Google and the smaller towns that often house the data centers that supply a nearby metropolis is so vast that local officials feel pressure to agree to NDAs so broad, they even circumvent state law in some cases, the Post reports.
“Public transparency laws are designed to keep the public interest at the contract table, and the way you do that is with information,” Stanford Law School professor Michelle Wilde Anderson told the Post. “If you scrutinize the winners and losers in this bargain, you see that Google is overwhelmingly the winner. Google has a strategic interest in getting their name out of these deals so that they go down more quietly, without public debate.”
Google's argument for this level of secrecy is that for data centers especially, even basic information such as power or water usage is vulnerable to competitors seeking trade secrets. But when deals are struck behind closed doors, the controversy that Google seeks to avoid has the potential to become even more explosive.