Amazon just snapped up 200,000 square feet of office space in downtown San Francisco. They have 1,300 job openings in the Bay Area/Silicon Valley. 30,000 employees in the Bay Area alone and climbing. California will give the tax breaks when it wants but Amazon will want to poach the best of the best from Google, Facebook, Apple, Oracle etc... etc... that's why they keep expanding there. Yes, its expensive to live in the Bay Area but the benefits of being able to tap into the millions of qualified tech and executive talent makes it worth it.
Besides look whats already there:
Amazon Digital Music | San Francisco, California
Alexa Internet | San Francisco, California
Goodreads | San Francisco, California
Amazon Lab126 | Sunnyvale and Cupertino, California
Alexa | Sunnyvale and Cupertino, California
A9 | Palo Alto, California
Amazon Web Services | San Francisco and Palo Alto, California
Amazon Game Studios | San Francisco and Palo Alto, California
Twitch | San Francisco, California
TenMarks | Burlingame, California