Last May, officials in Midlothian, Texas, a city near Dallas, approved more than $10 million in tax breaks for a huge, mysterious new development across from a shuttered Toys 'R' Us warehouse.
That day was the first time officials had spoken publicly about an enigmatic developer's plans to build a sprawling data center. The developer, which incorporated with the state four months earlier, went by the name Sharka LLC. City officials declined at the time to say who was behind Sharka.
The mystery company was Google — a fact the city revealed two months later, after the project was formally approved. Larry Barnett, president of Midlothian Economic Development, one of the agencies that negotiated the data center deal, said he knew at the time the tech giant was the one seeking a decade of tax giveaways for the project, but he was prohibited from disclosing it because the company had demanded secrecy.
"I'm confident that had the community known this project was under the direction of Google, people would have spoken out, but we were never given the chance to speak," said Travis Smith, managing editor of the Waxahachie Daily Light, the local paper. "We didn't know that it was Google until after it passed."
After the deal went through, Sharka changed its main address to that of Google's headquarters in Mountain View, Calif. Site work began last fall.
Google has vastly expanded its geographic footprint over the last decade, building more than 15 data centers on three continents and 70 offices worldwide. But that development spree has often been shrouded in secrecy, making it nearly impossible for some communities to know, let alone protest or debate, who is using their land, their resources and their tax dollars until after the fact, according to interviews and public records obtained through a Freedom of Information Act request.
With their growing reach into the U.S. economy and in the face of greater political scrutiny, tech giants including Google and Amazon are on a tear to expand — but communities now see their arrival more skeptically for the disruption, environmental impact and higher cost of living they often bring, as well as the incentives they seek, despite their deep pockets.
Local officials say they are pressed to maintain secrecy to lure powerful tech companies, who wish to avoid controversies and keep details about their operations under wraps.
Google CEO Sundar Pichai has announced $13 billion in new investments in data centers and offices across the U.S., a move that would grow the company's physical footprint to 24 states and create 10,000 new construction jobs. He said that 2019 would be the second year in the row the company is growing faster outside its home in the Bay Area than in it.
Yet Google has made extensive use of nondisclosure agreements in negotiations for its planned second campus in San Jose, Calif., the largest after its headquarters in nearby Mountain View. It has plans to build a large new campus in New York City as well as several other development projects, including in Virginia and Nevada, according to public announcements and company statements.
"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," Google spokeswoman Katherine Williams said in a statement.
Confidentiality agreements are common in development negotiations — but the level of secrecy around data center deals is unusual, experts say.
"Public transparency laws are designed to keep the public interest at the contract table, and the way you do that is with information," said Michelle Wilde Anderson, a Stanford Law School professor specializing in state and local government law. "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."
The Google records were obtained by the advocacy group Partnership for Working Families, which has sued the city of San Jose over its negotiations with Google, arguing that the more than a dozen nondisclosure agreements officials signed with the search were illegal under California law. Partnership for Working Families argues that secretive arrangements keep the public in the dark about the costs and benefits of corporate projects.
The records date back to 2006, when Google began its first wave of data center construction — warehouses of servers that house computing infrastructure — as the company raced to fight Microsoft and Yahoo in a war over search and new applications such as Gmail. The documents continue into 2018, offering a rare glimpse into the lengths Google has gone to keep these projects and their impact on the surrounding communities under wraps for over a decade.
Data centers, which can generate significant revenue for communities but use local resources such as energy and water, are sensitive sites for tech companies. If they are attacked, they could wipe out operations for the company. Everything from the technology they use to the location they are in are highly competitive.
The Partnership for Working Families sent Freedom of Information requests to local governments involved in brokering deals for Google's eight existing data centers in the U.S., plus Midlothian, and sent seven additional requests to cities where Google has offices.
Officials in eight of the cities signed nondisclosure agreements, or NDAs, in their real estate dealings with Google, according to the documents. The documents also show that the search giant used shell companies to negotiate to build data centers in five of the six localities with data centers that responded to the records requests, including Midlothian. Google's identity was eventually revealed, but often so late in the process that it precluded public debate.
Sometimes Google formed multiple subsidiaries, with distinct names, to handle different aspects of negotiations for the same site, according to the documents. 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.
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. 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.
Barnett said that some confidentiality is always necessary when negotiating competitive development deals. "When I'm trying to win a project, as all economic developers do, we abide by what the company wants. It would be detrimental to us to not to follow the company's lead," he said. "I've been doing this for 20 years, and my job is to make sure that my city gets the best deal. When a company asks for secrecy, I say yes. You have to build up trust."
Barnett said he did not believe that residents got the short end of the stick. Google's $500 million development would support local businesses, schools and 40 jobs that Google has promised to create over five years. "The community wins with this agreement," he said.
But some residents disagree.
A July article in the Waxahachie Daily Light announcing Google's role in the new data center elicited hundreds of comments and shares, with many residents complaining about the low number of jobs and the tax incentives.
"So Google comes in and pays no taxes for 10 years, and only brings in 40 jobs hmm sounds like a great idea," one local wrote.
Smith, the managing editor of the paper, said, "I'm not going to say we've been lied to, but we've been strung along."