- Apple announced plans for a new US campus, but notably did not say where it would be located.
- Apple’s announcement comes a few months after Amazon invited cities to submit bids and compete for the privilege of hosting the company’s second headquarters.
- Apple has not openly solicited bids or tax breaks, but history suggests it will reap many such financial perks.
Apple CEO Tim Cook is taking a page out of Amazon CEO Jeff Bezos’ playbook.
Apple announced on Wednesday, among other initiatives, that it plans to build a new campus in the United States, as part of an effort to hire 20,000 new Apple employees over the next five years.
Where will the new campus go? Apple said only that it will be announced later this year, and declined to comment if it already had a location in mind.
The whole process sounds a lot like Amazon’s process for what it calls “HQ2,” in which the e-commerce giant solicited bids from American cities for where it should spend an estimated $US5 billion build a new, second headquarters for 50,000 employees.
But while Amazon openly invited a bidding war, with hundreds of municipalities whose officials prepared packages of tax breaks and other perks for the tech company, Apple didn’t comment on whether it was soliciting bids or planned to have municipalities compete for the new campus.
It’s not Apple’s style to do a public contest – but given that Amazon received 238 different bids from cities, it’s safe to say that there are some economic development agencies putting together packages for Cook and Apple.
Apple is no stranger to state tax breaks
Apple is no stranger to the game of getting tax breaks in exchange for creating jobs.
So it won’t be surprising if Apple’s new campus has a special tax status negotiated with state or local governments – even if Apple isn’t holding a public auction of sorts, the way Amazon is.
Here’s a short, incomplete list of recent tax breaks Apple has received in the past decade:
- $US89 million in tax breaks from Reno, Nevada and the state of Nevada for a warehouse to hold parts for Apple servers, which was mentioned in Wednesday’s announcement.
- $US208 million in property and sales tax breaks from Waukee, Iowa and Iowa for a $US1.4 billion data center expected to creat 50 jobs.
- Millions of dollars in tax breaks for a Mesa, Arizona facility that was intended to be a sapphire screen factory for the iPhone but is now a data center.
- Over $US30 million in tax abatements from Prineville, Oregon, in exchange for jobs at a data center.
- As much as $US300 million in state tax breaks over 30 years for a data center in Maiden, North Carolina.
Although Axios reports that Apple isn’t “putting out a big request for proposals,” given that some municipalities are putting together packages worth as much as $US7 billion in tax incentives for Amazon, Apple would be irresponsible not to see what city and state governments are willing to pay for Apple’s shingle.
These are unlikely to be high-paying software jobs
— Tim Cook (@tim_cook) August 25, 2017
When Amazon announced HQ2, it said that it expected its new offices to be a “full equal” to its current Seattle campus.
Apple’s new campus won’t be its “second campus” and is unlikely to rival its current headquarters, at 1 Infinite Loop, or its new $US5 billion headquarters, Apple Park, both in Cupertino, California.
In fact, Apple already has several large campuses around the country, including satellite offices scattered around Silicon Valley and a big network of offices in Austin, Texas.
The jobs available at this new campus are unlikely to be high-skilled programming jobs making the next iPhone that come with huge salaries often found in California. Apple likes to do its engineering and design close to home in California, both for reasons of security as well as work culture.
As Apple noted in its announcement, the new campus will initially house “technical support for customers.” Much of that work is currently done in Austin, Texas, as reported by the New York Times in late 2016.
The Austin campus, perhaps the closest analogue to Wednesday’s planned campus, employs 6,000 workers, according to the Times. Workers at the Austin campus work on Apple’s online music and app stores, handle finance and operations, and field tech support calls.
Even in Apple’s hometown of Cupertino, California, non-engineering teams like those for the App Store or for cleaning maps are often located in satellite offices, not at Apple headquarters.
Here’s an example of the kind of tech support work that could take place at the new campus:
“During the recent visit, Stephanie Dumareille, a senior adviser on iOS issues who is fluent in English and Spanish, patiently answered questions from a customer who was worried about saving her résumé online and did not know whether she was using a Windows or a Mac computer.”
Glassdoor estimates a $US38,000 annual salary for technical support agents at Apple in Austin.
Didn’t they just build a new ‘spaceship’ campus?
Yes, Apple did just finish a new, stunning campus in California. Called Apple Park, it boasts amazing perks, including a huge gym, outdoor fruit trees, and huge four-story glass doors.
It is not, however, big enough for all Apple employees. Apple Park will hold 12,000 employees – but the company has 25,000 in the San Francisco Bay Area alone. Divisions seen as less important, like App Store workers and retail operations, will remain in satellite offices scattered around Silicon Valley.
In fact, Apple employs 84,000 people in the United States, including retail employees, it said on Wednesday. Apple’s employee base has grown as the number of iPhones it needs to service and support has also skyrocketed. In 2015, for example, Apple added 17,400 employees, according to SEC filings.
So in some ways Apple’s pre-announcement of a new campus was as much about Apple’s prodigious growth as American investment or a commitment to create 20,000 jobs.
But by withholding the actual location of the campus, Cook took a cue from Amazon, and turned what would have been just another new office into a media event – and likely some tax breaks too.