Amazon's new London tech hub could put pressure on start-ups

By Sooraj Shah
23 Jul 2012 View Comments

Amazon will open a new technology hub in east London in the next few months that some fear could have a negative impact on many of the technology start-ups in the area.

The e-commerce giant said that the hub, dubbed Digital Media Development Centre, will incorporate both the design and development teams from Pushbutton and LOVEFiLM.

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The eight-floor 47,000 square feet centre near Barbican tube station will house teams of software development engineers, user-interface experts and graphic designers, it said.

A spokesperson told Computing that Amazon's focus is "on getting the existing team into the building. But we are a growing company and we may well look to recruit in the future".

This last point chimes with an earlier statement by Paula Byrne, managing director of the centre in London, who said that Amazon chose London as it is a "hotbed of tech talent".

Julian Ehrhardt, head of business at digital design start-up UsTwo, which is based near the Barbican area, admitted that retaining talent would be a challenge with Amazon moving nearby, but added that the type of person that chooses a start-up to work in is different to one that chooses a corporate giant.

"You cannot stop recruiters tapping up your people or your people looking for options. People make a pretty clear choice between corporate giants and more dynamic and intimate start-up and SME companies; all you can do as a company is focus on creating a great place to work, it is a distraction to focus on what others are doing too much," he said.

According to Ehrhardt, only the smaller start-ups would suffer as the consequence of Amazon's presence, particularly if the rent prices for the area increased as a result of the move.

"It is not an issue for us as we can afford rent at the higher rates and are not a small fish with fewer than 100 staff. However, I do see that this could ultimately become a problem for small start-ups as the cost of being here will increase," he said.

Ehrhardt said that he was "happy for the area to get more attention to what is going on. It's good to see investment in this part of London".

His thoughts were echoed by the Mayor of London, Boris Johnson:

"For this wildly successful and dynamic company to choose our city to site such an important facility is a splendid feather in our cap.

"We know we have the talent, the space and infrastructure to make the most of the digital economy. Amazon's investment propels us well up the league table of global tech cities and we thank them for their vote of confidence," he said in a statement.

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