Last January, Amazon announced 20 cities as finalists for its soon-to-be-built US$5-billion headquarters, which it says will house up to 50,000 employees. Unlike many finalists, Toronto did not offer Amazon any tax incentives in its initial bid.

Amazon has revealed almost no public information about what it’s asking Toronto—or any of the 19 American cities that are also finalists—to offer.

But, an analysis of lobbying records by The Logic shows that after Toronto was shortlisted, Amazon dramatically ramped up its efforts to get government contracts for its cloud services business from the federal government, Alberta and British Columbia and the City of Toronto.

Amazon attributes the noticeable change in lobbying efforts to its hiring of several public affairs employees in early 2018 and the addition of a Canadian data centre in 2016 that allowed the company to bid on more government business.

“We have been working and talking to governments, across the country, long before Amazon announced it was seeking a location for HQ2,” said Jeffrey Kratz, general manager at Amazon Web Services (AWS) overseeing Canada and the worldwide public sector.

But lobbying records show that after Toronto was shortlisted, Amazon lobbied federal government officials 84 times. That’s four times more than other competitors in the cloud computing sector during the same time period, with Google Canada having lobbied 21 times; Microsoft 20 times; IBM 11 times; Salesforce five times and Box Canada just twice.

Talking Point Amazon ramped up its lobbying for cloud services contracts with the federal government, Alberta, British Columbia, Quebec and the City of Toronto, either right before or after announcing Toronto on the HQ2 shortlist. The most lucrative contract is at the federal level, where the government is considering switching all data storage to the cloud—contracts for that alone could be worth billions.

Despite its aggressive lobbying efforts this year, Amazon has received significantly less money in procurement contracts than IBM and Microsoft, its two chief rivals in the cloud space. As The Logic reported in June, IBM won $2 billion in federal government contracts in the past two years and Microsoft won $514 million. Amazon won no contracts during the same period, and just two contracts over the past six years: one in 2015 for about $12,000 from the defence department, and another in 2012 for about $22,000 from the environment department.

That could soon change, though. According to Kratz, AWS has tens of thousands of Canadian customers, and is in the process of expanding its Canadian staff. The company currently has over 100 open job postings up across Canada.

The federal government is considering awarding significantly larger contracts for cloud computing. An access to information request obtained by The Logic details a government plan to roll out select cloud services pilots in 2018 under the leadership of Alex Benay, chief information officer. If that goes well, the government will consider shifting all information that is not particularly sensitive—everything classified below Protected B—to the cloud. Those contracts alone could be worth billions of dollars: a similar one tendered by the Pentagon, for which Amazon is a strong contender, is worth US$10 billion.

In March, Amazon announced that Shared Services Canada, the central government department for technology services, had awarded contracts to six cloud technology companies that resell Amazon’s cloud services. So far, about $6,500 has been purchased from those six companies; Shared Services Canada has awarded only 26 cloud contracts in total worth just $8.36 million since December 2017.

The federal government is also working on awarding future cloud contracts for sensitive information, according to Frédérica Dupuis, a spokesperson for Shared Services Canada.

In recent months, Amazon has increased its presence in Canada in other ways. On Monday, Ottawa Mayor Jim Watson and Prime Minister Justin Trudeau are scheduled to attend a groundbreaking ceremony for a new distribution centre, which will employ over 600 people, just outside Ottawa. Amazon announced a similar centre, employing over 800, in Caledon in July. In April, the company announced its intention to hire an additional 3,000 in fields including e-commerce technology, cloud computing and machine learning in Vancouver. Trudeau was on-hand for that announcement, as well.

Questions sent to Trudeau were directed to Innovation Minister Navdeep Bains. Nilani Logeswaran, a spokesperson for Bains, did not directly reply to any of The Logic’s questions, including whether incentives had been requested by Amazon or offered by the government in an attempt to win HQ2 for Toronto. Instead, Logeswaran said, “We’re delighted that Canadian cities had the chance to submit proposals to become the location for Amazon’s second headquarters.”

Starting in February, lobbyists with some of Canada’s top public relations firms—Public Affairs Advisors, Crestview Strategy and Conseillers Affaires Publiques—began registering at the federal level for Amazon, seeking cloud-based contracts with over 60 government departments.

For example, Eric Lamoureux with Conseillers Affaires Publiques registered as a lobbyist for Amazon.com on February 28. He’s since met with senior officials at the Treasury Board and the Canada Revenue Agency to discuss government procurement. His registration states he is “seeking government contract with multiple government departments and institutions with regards to Amazon cloud-based solutions and related support services.”

Eric Gales, president of AWS Canada, registered to lobby 19 federal government departments, including the Prime Minister’s Office, in March. AWS met with numerous senior officials, including Scott Brison, president of the Treasury Board, and Benay.

Although AWS has had Canadian customers for over a decade, Gales was hired as the first regional manager for Canada in October 2015. Initially, AWS was ineligible to bid on certain government contracts due to laws limiting what types of data can be stored outside of the country. The company launched a Montreal data centre in December 2016, which allows customers to store their data in Canada.

“One of the reasons we decided to expand AWS’ footprint into Canada was based on the demand from both the public and private sector to run AWS workloads and store data in country,” said Kratz.

Candi Jeronimo, public relations manager for AWS Canada, said the company has hired a number of public policy staffers in Canada since launching the data centre in 2016, in an effort to grow their Canadian presence.

“You may be seeing more [lobbying] because of those dedicated efforts this year,” said Jeronimo.

In February, Nicole Foster joined AWS as head of public policy for Canada. Prior to that, Foster spent 13 years at the public relations firm Global Public Affairs, where she lobbied for a variety of influential groups, including the Canadian Association of Petroleum Producers and the Canadian Wireless Telecommunications Association.

Amazon lists two Canadian governments as clients on its website: the province of Ontario and the region of Waterloo. The company employed one lobbying firm at the federal level, Hunter Strategic, to look for cloud services contracts prior to shortlisting Toronto, but the number of meetings and lobbyists has increased significantly post-announcement.

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On January 30, less than two weeks after Toronto was shortlisted, Amazon registered two lobbyists with the City of Toronto, one of whose registration states he is seeking a government procurement contract for cloud computing, as well as hoping to influence city policy on the “public cloud…data centres, technology infrastructure, websites [and] web services.”

Erin McGuey, a spokesperson for the City of Toronto, said the City has purchased cloud services from Amazon, but not since January 2018. She said the City “has not purchased Amazon cloud services as a way to incentivize Amazon.”

AWS is by far the most dominant global player in cloud services, consistently enjoying about a third of global market share for the past three years. The company also has a lead in every part of the world when it comes to the public cloud, with about 40 per cent of all public cloud revenues worldwide.

Quarterly cloud infrastructure service revenues are now at almost US$15 billion across all companies, according to an analysis by Synergy Research Group. The cloud industry is growing rapidly, as governments and businesses of all sizes look for cost-efficient ways to store the data that is becoming increasingly central to how everything operates. In the past two years alone, quarterly revenues across all companies have increased significantly, up from about about US$9 billion in 2016.

“We always believed there would be several players in this space, as the value proposition for customers is too great,” said Kratz “We were always surprised by how much of a head start our competitors gave us.”

Amazon has four lobbyists in British Columbia. They started seeking a cloud services contract on July 25, listing Premier John Horgan and several cabinet ministers as target contacts for their lobbying. The company started pushing for a government contract in Alberta the next day.

In Quebec, the company started seeking a cloud-based contract about a week before Toronto was shortlisted.

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