Just three weeks after Amazon abruptly dropped its plan for a second headquarters in New York City, CEO Jeff Bezos had to confront the matter with staff members who wanted to know what went wrong. At his semi-annual all-hands meeting in March, Bezos was asked to discuss what he would do differently if given the opportunity.
For the answer, he handed the microphone to Jay Carney, Amazon's public policy and communications chief, who is seasoned when it comes to handling tough questions — he was President Barack Obama's press secretary from 2011 to 2014.
Carney was a central player in the HQ2 negotiations and Amazon's agreement to open an office in Long Island City, where it promised to create 25,000 jobs in exchange for tax breaks and credits. Amazon retreated after a chorus of protests and critical comments from lawmakers and turned its focus entirely to its other HQ2 city of Arlington, Virginia, just outside Washington, D.C.
"It's fair to say that no one particularly expected what we saw in New York," Carney, 54, said at the meeting in Seattle, home to Amazon's main headquarters. "We ran into an unexpected political climate and had to evaluate our decision-making process based on that."
Carney said he was particularly caught off guard because city officials, not Amazon executives, had made the proposals and "invited Amazon to locate an HQ2" there, according to a recording of the meeting that was obtained by CNBC.
Carney may have left politics for the private sector, but the government has crept into almost every corner of his work, as Amazon expands its physical presence in and around the Beltway and lawmakers focus on the company's every move. Lobbying spending has almost tripled under his watch, the public policy team has ballooned in size, and it's Carney's job to confront the scrutiny that comes with being the world's second most-valuable publicly traded company led by the world's wealthiest person.
Of late, Amazon has been a constant punching bag for politicians. President Donald Trump frequently attacks the company, largely because of Bezos' ownership of The Washington Post, which has been critical of Trump's administration. From the other side of the aisle, Amazon has gotten heat from Democratic presidential hopefuls such as Sen. Bernie Sanders of Vermont, for issues related to employee pay, and Sen. Elizabeth Warren of Massachusetts, who proposes breaking up Big Tech. In the first Democratic debate on Wednesday, Sen. Cory Booker of New Jersey accused Amazon of paying "nothing in taxes."
After Amazon announced its change of plans in New York, Democratic Rep. Alexandria Ocasio-Cortez, who represents a neighboring Queens district, applauded the community for defeating "Amazon's corporate greed, its worker exploitation, and the power of the richest man in the world."
The hits have continued. The Federal Trade Commission has reportedly assumed competition oversight responsibilities over Amazon, as regulators prepare to take on the tech industry. All the while, Amazon is battling with Microsoft to win a cloud-computing contract from the Department of Defense that could be worth $10 billion over a decade.
Amazon is far from alone among tech companies who have turned to Washington insiders for help navigating Capitol Hill. Facebook hired former George W. Bush staffer Joel Kaplan in 2011, and three years later former Obama adviser David Plouffe joined Uber (he left in 2017 for the Chan Zuckerberg Initiative). Google has employed a number of D.C. operatives and last year hired Karan Bhatia, formerly of the Commerce and Transportation departments, as vice president of government affairs and public policy.
Carney, who still lives in the D.C. area, had been in talks about a potential role with companies including Apple and Uber as he was looking to enter the private sector, according to a person familiar with the matter.
Trusted advisor
At Amazon, Carney is a unique presence in the company's highest ranks. He's one of only two remote members of Bezos' exclusive S-team, the 18 most senior executives who work closely with the CEO, along with Amit Agarwal, the head of Amazon India. And he's distinctly not an engineer, or even a businessman, having spent 20 years as a political journalist with Time Magazine prior to his time in the White House. Before Carney's arrival, the policy team reported to the legal department and was two levels removed from Bezos.
At a time when public backlash against big tech companies is stronger than ever, Carney's dual role of running a large public relations staff for one of the globe's most recognizable brands while also educating policymakers about the nuances of Amazon's business presents a complex challenge.
"Technology companies, including Amazon, are not universally seen as the great saviors of communities and the future anymore," said Frank Sesno, a former White House correspondent for CNN who now teaches media and public affairs at George Washington University. "They are seen, in some cases, as a real menace, and that's a very different story to tell. In many ways, Carney is uniquely positioned for this job."
CNBC spoke with more than a dozen people who have worked with Carney at various points in his career for this story. Most of them requested anonymity because of confidentiality agreements.
Amazon didn't provide a comment for this story, and Carney declined to be quoted.
Carney, who majored in Russian and East European studies at Yale University, started his reporting career at The Miami Herald in 1987 and soon joined Time Magazine's Miami bureau. At the magazine, he reported on the collapse of the Soviet Union from Moscow and then moved to Washington, where he covered Bill Clinton's impeachment and the presidency of George W. Bush.
Carney jumped from journalism to politics in 2009, becoming communications director for Vice President Joe Biden. He spent more than five years with the Obama administration, the last three running the president's press office, before leaving in 2014 to work as a political analyst for CNN.
To lure Carney out of the news and politics realm, Bezos created a top-level position for him running public relations and public policy. He also made the highly unusual decision to immediately add Carney to the S-team, a group with very little turnover that includes the senior-most employees, such as Andy Jassy, CEO of Amazon Web Services; Jeff Wilke, CEO of the consumer business, and CFO Brian Olsavsky.
Bezos hired Carney as Amazon was entering a tougher regulatory environment. The company was already dealing with issues related to taxes and shipping regulations and had to look ahead to drone delivery rules and content copyright legislation.
Carney had all the important connections. Under his leadership, Amazon's policy team ramped up dramatically, going from a group of a few dozen people to roughly 250 people today. Along with the communications team, Carney oversees about 800 people globally, compared with the two dozen or so that are typically part of the White House press office.
Carney, who spends about one-third of his time in Seattle, has nine people — mostly vice presidents — reporting to him directly. He recently added Aleksandra Lopez, head of business operations and global corporate affairs, to the list, while AWS PR head Mary Camarata no longer reports directly to Carney, according to people familiar with the matter. It's the latest sign that Carney is more focused on policy than on the media relations aspect of specific business units.
'Watering the flowers'
Every policy team member's performance is tracked through a rigorous internal program called "Watering the flowers." The flowers represent elected officials, and the goal is to create a well-tended "garden" of pro-Amazon policymakers, from state governors and senators down to local officials and economic development teams, according to current and former employees. Based on sales management software from Salesforce, the program measures employees on things like how many meetings and events they attend with power players.
They're trying to influence lawmakers across the spectrum. Amazon's political action committee, Amazon PAC, almost tripled spending in 2018 to $1.8 million over its 2016 level, contributing to Democrats and Republicans, according to the Center for Responsive Politics. Wilke recently sent around an email announcing the launch of the "Amazon PAC 2019 membership campaign," asking employees to consider "joining our effort to create a pro-customer public policy environment."
Here's the opening paragraph of the email, which was viewed by CNBC:
We continue to face new legislative challenges and opportunities as our business continues to expand into new areas and the federal political environment changes in Washington, DC. Strong public policy advocacy allows us to continue to innovate on behalf of our customers, employees, and the many authors, artisans, and small businesses that sell in our stores. Our Amazon Political Action Committee (PAC) is an important component of that advocacy in the U.S.
Amazon's lobbying spending is also on the rise, as the company looks to pressure policymakers on net neutrality, data protection and postal reform. Spending rose to $14.4 million last year from under $5 million in 2014, the year before Carney joined, and the growth continues, with costs reaching $4 million in the first quarter, according to the Center for Responsive Politics. During the period, Amazon paid $90,000 to consulting firm McGuirreWoods, which has been working on tax-related issues, and $70,000 to Ballard Partners, a firm led by a Trump fundraiser, for matters related to trade policy and counterfeit goods sales.
At another all-hands meeting last year, an employee asked Bezos about the heightened criticism that Amazon is facing and demands that it be further regulated. He said the company has to continue to tell "our story" about the benefits of its products and services while also refusing to be bundled with other tech companies such as Google, Apple and Facebook to avoid fighting "this kind of Big Tech impression."
"Jay Carney and his team are tasked with telling that story," Bezos said.
Sticking up for the chief
Carney's first test in crisis management at Amazon had nothing to do with politics.
Two months after a 2015 New York Times investigation on Amazon's "bruising workplace" went viral, Carney wrote a 1,300-word reply on Medium, blasting the paper for sensationalized reporting. He then traded barbs with Dean Baquet, executive editor of the Times.
But for the most part, Carney stays out of the public eye. His name shows up in about one press release a year, when Amazon is doing something uplifting like donating money to fight homelessness or announcing an increase to its minimum wage. He's not particularly involved in day-to-day operations and remains a mysterious figure to many of his underlings, with some saying he has a hands-off management style.
Even during the HQ2 selection process, the biggest project under Carney's watch, he never made a visit to New York City, according to a February story in The New York Times, which CNBC confirmed with two people familiar with the matter.
About the only time he's been quoted as an Amazon spokesperson was during the media circus earlier this year surrounding Bezos' romantic involvement with Lauren Sanchez and his announced divorce with MacKenzie Bezos, his wife of 25 years.
Carney had particularly harsh words for The Wall Street Journal in a story the paper published about the affair with Sanchez, an actress and news personality, and Bezos' rising profile in Hollywood.
"I didn't realize The Wall Street Journal trafficked in warmed-over drivel from supermarket tabloids," Carney said.
Ron Klain, Biden's former chief of staff who is now general counsel at venture capital firm Revolution, said working as the press person for the president was adequate preparation for what Carney now faces at Amazon.
"If you've spent time as the press secretary for the president of the U.S., you're used to a lot of high-pressure situations — and Jay has navigated all that," said Klain, who remains friends with Carney. "That's a big asset for Amazon."
As a member of the S-team, Carney is frequently consulting with top executives on the most pressing issues facing the company. That's one of the main reasons his staffers often don't see him for extended stretches. Carney's absence from view makes it difficult for him to inspire and motivate the team, according to people who have worked for him. They also say that when it comes to Amazon's core consumer business, Carney can come across as uninterested.
To address some of these concerns, Carney recently began holding open office hours in Seattle and started an email newsletter highlighting work from inside his group, according to two people familiar with the matter. When Carney joins group meetings, he's known for letting others speak up and inserting himself only when he can add value.
Carney delegates most of the daily work to his most trusted group of top lieutenants, people with knowledge of the matter said. On the policy side, that falls to Brian Huseman, a former FTC official who is Amazon's vice president of U.S. public policy. Drew Herdener, a 16-year Amazon veteran, leads all corporate communications, and Christina Lee, formerly of venture firm Kleiner Perkins, runs all PR for consumer and device units.
Carney also hired Michael Punke, a former U.S. ambassador to the World Trade Organization, to lead AWS public policy two years ago, and brought in Susan Pointer from Google last year to lead international public policy.
People who have worked with Carney describe him as a mild-mannered, soft-spoken leader with a calm demeanor who's often sipping on a cup of coffee. But the work environment on the policy team is far from relaxed, people familiar with the matter said. The team has cultivated an extremely fast-paced, cutthroat culture with significant pressure on performance, they said.
Amazon's PR team has long had a reputation for giving little access to the press. In his previous job at the White House, Carney had his share of encounters with the press corps. For example, dozens of major media companies wrote a letter of petition to Carney in 2013, demanding better photo access to Obama after facing heavy restrictions at public events. The Obama administration was also aggressive in investigating press leaks.
"One of the Obama administration's principal priorities was controlling the narrative," said Sesno, the George Washington professor. "Being judicious with press access is something that fits with the Amazon culture."
Too big?
Located in downtown Washington, across from Union Station, Amazon's policy office is split into two areas. Three-quarters of the space is for offices, and the rest is used to host events for policymakers. The building is decorated with displays of Amazon's Kindle e-readers and its first delivery drone prototype to educate visiting lawmakers about the extent of Amazon's business.
In recent years, the policy team has been grappling with how to deal with Amazon's explosive growth. In Seattle, the company has sparred with local officials, who have tried to force Amazon to give more back to the city. Last year, Seattle reversed a proposed law that would have charged big local companies like Amazon an additional tax to help solve the city's homeless problem. One reason for the HQ2 expansion was to reduce its reliance on Seattle, people familiar with the matter said.
The broader concern is the perception that Amazon is too big and too dominant in business, inviting antitrust allegations, people familiar with the company's thinking said. Amazon's leadership instructed certain policy and sales people to stop using words that implied market power, such as "platform" or "crushing it" in meetings. The word platform disappeared from all of Amazon's quarterly and annual reports over three years ago.
Instead, Amazon has been focused on telling the world how relatively small it is. The company likes to stress that its overall business accounts for just 4% of total retail spending. In his most recent annual shareholder letter, Bezos wrote that third-party sellers, who use the site to connect with buyers, are "kicking our first party butt." EMarketer recently dropped Amazon's U.S. e-commerce market share from 47% to 38% after accounting for the new data shared in Bezos' letter.
Carney remains close with his Washington insider friends such as Klain. His wife, Claire Shipman, was a senior national correspondent for ABC News, and she previously covered the White House for NBC News. They have two kids, who go to the same school that Obama's children attended. Their daughter plays soccer, and their son is the lead singer for a rock band called Twenty20, which includes three other children of former White House staffers.
Music is a family hobby. Carney is in a garage band with former deputy national security advisor Antony Blinken, journalists Dave McKenna and David Segal, and Eli Attie, a screenwriter for "The West Wing." The members are spread out from Los Angeles to London, so they only get together about once a year to record songs they know will never get released, according to people with knowledge of the group.
Carney keeps a guitar in his office and another at his second home in Seattle. One of his favorite bands is indie-rock group Guided by Voices. It's a level of fandom he shares with Beto O'Rourke, the Texas Democrat who ran against Ted Cruz for Senate and is now vying to be president. Carney was a big O'Rourke supporter in his 2018 Senate campaign. He has since donated $250 to O'Rourke's presidential effort and the same amount to Booker and Sen. Kamala Harris of California, who are also seeking the Democratic nomination.
But while Carney is in touch with several of the campaigns, he's now throwing his support behind Biden, according to a person familiar with the matter. In a recent CNN interview, Carney called Biden a "serious person with high integrity," adding he has an opportunity to reintroduce himself as "Biden the potential president."
Carney isn't shy when it comes to tweeting about politics or defending Amazon against attacks from politicians. In mid-June, he tweeted back at Ocasio-Cortez for making what he said were false claims about Amazon's wages. In May, he held his first comprehensive press briefing with The Washington Post to explain how HQ2 would benefit Northern Virginia, and earlier in June spoke about that topic on a panel with Sen. Mark Warner, D-Va., at the AWS Public Sector Summit in Washington. (Last year, Carney contributed $2,700 to Warner, who's up for reelection in 2020.)
Facing off with politicians is somewhat of a pastime for Carney. In 2014, as a prominent pundit on CNN, he got into a heated debate with the late Sen. John McCain over the way Obama's administration handled the Islamic State. A testy McCain famously led, "You don't have the facts, Carney."
One topic Carney is not touching, however, is Trump. While Amazon is a frequent target of the president's tweets, the company has generally chosen not to engage because it views Trump's claims as nonsensical and intended only to spark a fight and attract attention, according to a person familiar with the company's strategy.
Whether it's under Trump or a Democratic administration, Amazon is likely to spur controversy in Washington for the foreseeable future. And other than Bezos, no single individual at the company is more responsible for the messaging than Carney.
Paul Argenti, a professor of corporate communications at Dartmouth's Tuck School of Business, said Carney showed weakness in the HQ2 process, which generated more negative publicity than goodwill. The incident indicated that a high-profile guy who spent his career in journalism and politics has a lot to learn when it comes to branding, community outreach and corporate public relations, he said.
"To assume that a good reporter is going to be a good corporate communications manager is like assuming a good professor is going to be a good dean — it just doesn't translate that way," Argenti said. "That is the biggest criticism I would have about him."
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