This is pretty much the status quo for major infrastructure projects. Look at what happens with new sports stadiums between New York and New Jersey -- they each bend over backwards to see who can provide the most subsidies.
Why do you think New York wouldn't be able to provide a competitive "bid" to be one of the next cities? I can see why they wouldn't want to provide e.g. free office space as a result of the difference in local real estate prices, but that doesn't mean they can't offer something else. Tax incentives are a popular staple for this sort of thing. And NYC has the huge advantage that Google can wire more customers for less money as a result of the high population density, which means New York wouldn't have to offer the most concessions in order to be the most attractive.
Permit pile-on has killed quite a few nascent populist telecom infrastructure projects in recent memory. Commercial projects generally have enough revenue involved to be worth working around the issues.