It has nothing to do with those companies deserving anything. The problem that is being solved is that if Twitter or Zynga leaves San Francisco and continues to grow and hire people in their new location, that will be used against the current politicians in upcoming elections. Challengers could point to the new jobs being created in another Bay Area city and say, "San Francisco could have had those jobs, but Politician X let them leave. I will make sure we keep the new jobs in San Francisco." On the other hand, if the current politicians give Twitter or Zynga too big of a tax break, they'll get challengers claiming that they gave away the store to these rich companies, along the lins of what some politicians are already saying about any proposed deal. Hence, the negotiations.