For one of the most contentious pieces of real estate in all of North America—not to mention ground zero for a global debate on data privacy and the future of urban development—it’s really not much to look at. Just a few abandoned silos poking up from an otherwise empty gravel lot, with a few small boats parked along its shores and a two-story blue building that houses the organization at the center of a rapidly intensifying debate.
On October 17, 2017, Canadian Prime Minister Justin Trudeau stood on that derelict gravel lot—shoulder to shoulder with the mayor as well as then-Alphabet executive chairman Eric Schmidt—to announce a plan to turn that parcel of land along Toronto’s waterfront into a smart city project in partnership with Sidewalk Labs, an arm of Alphabet and sister company of Google.
With a promise to “reimagine cities from the internet up,” Sidewalk Labs proposed a future-ready neighborhood with all the latest smart city technologies baked in; an advanced, smart power grid that utilizes thermal energy, a freight management system aided by underground tunnels and “smart containers,” dynamic streets that can serve a range of purposes in a given day, as well as highly efficient stormwater and waste management systems, to name just a few.
While the announcement was widely met with enthusiasm, many have since changed their tune. In the nearly two years since the announcement, countless scandals, breaches, and ethical concerns surrounding the world’s biggest technology companies have forced issues of data security, ownership, and privacy rights into the spotlight.
Between the Cambridge Analytica scandal, congressional antitrust hearings, the theft of data from a range of major private companies including Capital One, Equifax, and T-Mobile; foreign disinformation campaigns and election meddling; and the popular Netflix documentary The Great Hack, public trust in the technology industry has deteriorated significantly in a relatively short period of time.
After years of using free technology products without reading the terms and conditions, more citizens have woken up to the fact that they are the product, or more specifically, their data is. Now that many have come to understand the value of data—which surpassed that of oil in 2017—as well as all the ways in which their information can be abused, hacked, or stolen, Torontonians are having second thoughts about inviting one of the world’s most efficient data collectors to experiment in its backyard.
A July 2019 survey by Forum Research found that while only 38% of Torontonians were familiar with the proposed development, 60% of those who were did not trust Sidewalk Labs to collect data on residents.
Though the project has been proposed for Toronto, the city is only a testing ground for the technologies that could one day impact every city in the world, assuming they’re given the opportunity. On June 17, Sidewalk Labs released its much anticipated, 1,524-page-long Master Innovation and Development Plan, or MIDP, leading “many large-scale developers, municipalities, even countries to reach out,” according to Sidewalk Labs CEO Dan Doctoroff. “The level of interest in this approach around the world is actually quite significant.”
Whether you’re enthused or concerned about the potential of smart city technologies—or maybe a bit of both—their development and deployment is seemingly inevitable. In fact, many cities already optimize the efficiency of civic resources through data gathering. Rather than retrofitting these technologies into existing infrastructure, however, Sidewalk Labs is starting with a blank patch of gravel. If successful, the project could be a major step forward for smart city innovation, and set a precedent for a new era in urban development.
Before Sidewalk Labs is given that opportunity, it’s going to have to address a range of concerns brought forward by the agency tasked with overseeing the project. If it can’t, the Toronto project could be scrapped as early as October 31, before the first shovel is in the ground. Many would consider that outcome as a win for privacy and individual data rights. But others would consider it the end of the city’s hard-won reputation as an innovation center, and perhaps its last chance at fixing some of its most pressing urban challenges.
What began as a widely celebrated opportunity for the city has now fully devolved into tense public forums, a #BlockSidewalk hashtag campaign, an online petition, a lawsuit, a series of high-profile resignations, a war of words between some of the country’s most prominent tech industry leaders, and a far from settled debate that’s capturing global attention while setting a precedent for all future smart city projects to come. Not bad for an ugly patch of gravel.
How we got here
In 2001, Toronto’s municipal, provincial, and federal governments created a nonprofit organization called Waterfront Toronto to improve, well, Toronto’s waterfront. The land had largely sat untouched since the city’s manufacturing heyday a century ago.
The organization has largely been celebrated for its accomplishments in that regard, turning a long-abandoned manufacturing district into a modern, usable waterfront. Now Waterfront Toronto finds itself trapped in a global spotlight thanks to 12 of the 2,000 acres it oversees.
In 2017, the organization announced a $1.25 billion (CAD) taxpayer-funded flood-protection project across an area along Toronto’s Waterfront called “The Port Lands.” As the previously dormant slice of prime real estate became available for development, Waterfront Toronto began seeking a partner to turn a portion known as Quayside (pronounced “key-side”) into something that would help further its mandate of solving some of the city’s biggest challenges.
“It was a challenge-based RFP (request for proposal),” explains Andrew Tumilty, the media relations and issues advisor for Waterfront Toronto. “We put a set of criteria out there to ask proponents how they would address urban challenges, whether it was how to create affordable housing, how to move toward climate-positive neighborhoods, or better mobility solutions.”
Toronto is the second-fastest growing metropolitan area and fastest growing city north of Mexico—according to a study conducted by the Centre for Urban Research and Land Development at Ryerson University—and continues to struggle with a range of growing pains. Its infrastructure, particularly roads and public transit, weren’t built to accommodate its current population. The city was ranked sixth worst in the world for commuting in a study by Expert Market and is home to the 12th most-expensive real estate market in the world, according to a study by CBRE.
“The issues that Toronto faces as a successful, open, inclusive city are only getting more acute as the city grows more successful,” says Doctoroff, who, in a pre-Sidewalk life, served as New York City’s deputy mayor for economic development from 2001 to 2008 under Mayor Michael Bloomberg.
In 2015 Doctoroff took the reins of the newly formed Alphabet portfolio company, which described itself as an urban innovation firm. One of the company’s first projects was LinkNYC, which turned pay phones into ad-supported Wi-Fi hotspots. Sidewalk Labs also invests in and incubates smart city tech startups like COORD, Cityblock, and Intersection, but had never attempted an urban development project like the one it’s proposing in Toronto.
Waterfront Toronto reportedly began courting Sidewalk Labs in 2016, providing the newly formed company with surveys, topographic illustrations, and a guided tour of the area, before releasing its formal request for proposal in March of 2017. Waterfront Toronto received six responses to their RFP, and made its selection of Sidewalk Labs’ plan in September, inviting the prime minister, premier, and mayor to announce the decision the following month.
The resistance is born
The polarizing debate around Sidewalk Labs has caught the attention of just about every real estate developer and technology expert in the country, many of whom have taken a strong stand.
In February of 2018 a citizens group calling themselves “Block Sidewalk” began a hashtag campaign and online petition on the basis that “if we don’t say ‘no’ now, there will be no way for any of us to opt out later,” according to a statement recently posted to its website.
Then on July 30, 2018, the night before voting on whether to proceed with the Plan Development Agreement (PDA) with Sidewalk Labs, high-profile Toronto real estate developer Julie Di Lorenzo resigned her position on the board of Waterfront Toronto. She says she took issue with the fact that the PDA explicitly said that Waterfront Toronto’s government and public relations would be done in partnership with Sidewalk Labs. “Waterfront Toronto was created by three levels of democratically elected government, so I didn’t feel it at all appropriate for government relations to be done in conjunction with a for-profit limited liability company,” she says.
In October 2018, the former chariman and co-CEO of BlackBerry maker Research in Motion, Jim Balsillie, published a scathing op-ed in the national Canadian newspaper the Globe & Mail accusing Waterfront Toronto of “making irreversible decisions that will have major negative effects on all Canadians” and pushing a “colonizing experiment in surveillance capitalism.”
Balsillie says he felt compelled to voice his opinion after discovering that Waterfront Toronto was asking Sidewalk Labs—a for-profit, private company—to propose its own data governance policy.
“I’m like, what are you guys doing here? You’re rushing into something that is enormously consequential, irreversible; you have no knowledge of what you’re doing and no expertise,” he recalls. “Our policy community was asleep on it, then they gave away the keys prospectively for a vendor to design the data governance, for God’s sake, without any interplay with politicians and their citizens.”
The same day that the op-ed was published, TechGirls Canada founder Saadia Muzaffar resigned from her role on Waterfront Toronto’s Digital Strategy Advisory Panel, citing “apathy and a lack of leadership regarding shaky public trust.”
Weeks later, the province’s former privacy commissioner, Ann Cavoukian, also resigned her consulting role with the organization. She reportedly felt compelled to do so after discovering that while Sidewalk Labs was able to commit to stripping the data it collects of all personal identifiers, it couldn’t guarantee that others who utilize the data would do the same.
Then in April of 2019 the Canadian Civil Liberties Association filed a lawsuit against the municipal, provincial, and federal governments on the basis that the government bodies “sold out our constitutional rights to freedom from surveillance and sold it to the global surveillance mammoth of behavioral data collection,” according to Michael Bryant, the executive director and general counsel of the CCLA, speaking at a press conference.
Doctoroff argues that the proposed data management structure is only that, a proposal, and that Sidewalk Labs is prepared to comply with whatever the Canadian government decides is best. Balsillie, however, isn’t confident the government is well equipped to make such important and complicated decisions.
“I think those that made the decision in political and policy circles are embarrassed of the decision they made, and they’re trying to reverse course,” he says, citing the Halloween deadline as evidence. “They were naive, they were dazzled; now they just want to pretend it didn’t happen and get rid of it, because it was a mistake.”
The neighborhood of the future
Sidewalk’s vision for the land in Toronto is hardly restricted to the controversial wrangling of data. Volume 2 of its MIDP report is titled “urban innovations,” and focuses on five primary areas: mobility, public realm, building and housing, and sustainability and digital innovation. It might as well be a list of Toronto’s most urgent civic challenges.
It details features like heated sidewalks and a reclaiming of public space for pedestrian and public use, utilizing “building raincoats” to protect them from the elements. Curbless sidewalks dotted with LED lights would be able to adapt and change uses throughout the day. An underground system of tunnels would entirely eliminate the need for trucks to enter the neighborhood, with goods and waste delivered and disposed of using “smart containers” that all lead to a single building at the neighborhood’s edge.
“At the end of the day, if we are actually able to do what we think we can, this district will actually be exporting clean energy back into the grid, which might be the first time that that actually happens in a place of scale anywhere in the world, and may set a model for not just Toronto but other places,” says Doctoroff.
The MIDP describes a robust neighborhood of roughly a dozen buildings that mix office space, retail space, affordable housing, luxury housing, and plenty of public spaces. The MIDP also emphases mixed-use housing, with half of the units available for rent, and the other half for ownership. Of those rental units, 40% will be available below market rates, in an effort to address Toronto’s skyrocketing real estate market. By comparison, only 2% of housing built or approved in Toronto in the last five years has met the city’s affordability standard.
“Families that are priced out of downtown Toronto, this is providing space for them,” explained Jesse Shapins, the director of the public realm for Sidewalk Labs, standing next to a model of the proposed neighborhood built inside the one blue building that currently occupies the land. “What we’re really interested in here is proving out a development model that can result in truly mixed income, mixed age, and mixed use community that can be successful here and hopefully replicated in other places.”
The MIDP describes buildings created out of “mass timber” rather than steel or concrete, and proposes the construction of an $80 million mass timber production facility in the province. “Right now, if we wanted to do this type of taller timber construction, a lot of the leading factory suppliers are based in Europe, where a lot of this technology started,” explains Shapins.
Timber-based construction materials could also significantly reduce building costs without sacrificing design quality, according to Doctoroff, while smart appliances and innovative design practices “can enable people to live in fewer square feet without sacrificing their quality of life.”
Sidewalk labs has committed to a $900 million equity investment that will contribute to the $3.9 billion budget for the first phase of the project, and has proposed another $400 million to accelerate the development of a light rail transit system to the neighborhood. The company will also provide $10 million in initial seed funding for an Urban Innovation Institute, and serve as lead developer, technical partner, and advisor.
In exchange the company expects to purchase the land at a price that “fairly accounts for the heightened public policy outcomes required,” to be “reimbursed, over time, for its advisory and implementation services,” as well as “expenses Sidewalk Labs incurs in its delivery of technical and advisory services” and earn “performance payments” to be negotiated at a later date. According to the MIDP, Sidewalk Labs will charge “corresponding fees” in order to “implement a comprehensive innovation and development strategy” and to use products developed and designed by Sidewalk Labs “with corresponding IP sharing provisions for certain technologies.”
The MIDP claims that implementing Sidewalk Labs’ full vision could result in more than 93,000 jobs, $14.2 billion in annual GDP output, and $4.3 billion in annual tax revenue by the year 2040.
Mounting data and privacy concerns
Much of what’s proposed in the MIDP, however, relies on the use of sensors that can track things like energy usage, flood drain capacity, public space utilization, and waste volume in real time. “To ensure real-time deployment, these sensors would gather daily data at key distribution points,” according to the proposal.
Sidewalk’s Shapins, however, is quick to point out that these things are already being tracked in one form or another by the local government. “The technology is a lot around environmental systems, understanding things like the capacity of the storm water system and how you can make the neighborhood more flood resistant,” he says.
While the project sounds a lot less like an Orwellian nightmare in that context, the president of Ontario-based cyber firm Identos, Mike Cook, says the project is getting a little too close to a surveillance state for his liking.
“When Sidewalk Labs brought this intense focus around the actual capabilities that were being enabled and delivered in the future here, it represented a much broader ability to capture essentially privacy-infringing amounts of information around a citizen,” he says. “This is no longer just a ‘Hey, I’d like to use this free Wi-Fi service and I agree to let you track me.’ This is much more 1984.”
Cook argues that a neighborhood designed as a laboratory for the development of new technologies raises a lot of privacy concerns for its inhabitants and visitors. He adds that the conversation around intent of use for such data has only recently breached the mainstream, preventing many from providing their consent as quickly and thoughtlessly as before. “The conscientiousness has been born, and the timing of Sidewalk Labs and the media associated with it came at the right time to imprint that thinking,” he says.
While the sensors built into the Sidewalk Labs infrastructure will be used to optimize public resources, a proposed Urban Innovation Hub will invite startups and other third-party technology companies to build additional products, services, and innovations with that data.
“The data may get used for public good, but what else will it be used for and where does the citizens ‘rights’ start and end?” asks Cook. “The project hasn’t sufficiently demonstrated how they will deliver transparency and control for citizens with respect to how data is collected and used.”
Sidewalk Labs has proposed the creation of an independent, government-sanctioned “Urban Data Trust” to oversee the collection, storage and use of “urban data,” which includes “both personal information and information collected in a physical space in the city, where meaningful consent prior to collection and use is hard, if not impossible, to obtain,” according to the MIDP. “All projects or pilots involving urban data would have to follow the proposed Responsible Data Use Guidelines, and be subject to the oversight of the proposed Urban Data Trust.”
Even if used responsibly, however, Cook argues that the data will have far greater value than what the citizens of Toronto will enjoy. “We can’t give away our data, city by city, for some free tech,” he says.
Furthermore, at a time when banks and governments are struggling to keep data properly protected, some are concerned that it’s only a matter of time before the “Urban Data” falls into the wrong hands. Doctoroff, however, believes the brand’s sister company can lend some credibility in that regard.
“We are fortunate to have the benefit of Google, who probably is among if not the most security-focused company that exists, helping us to design some of those things,” he says. “Our corporate parentage and family should give at least some comfort that this is something that is going to be taken extraordinarily seriously.”
The delicate ego of a Canadian city
It’s not easy to spend the majority of your history watching all the action from the sidelines of a national border, and after striving to be part of the global tech conversation for so long, Toronto has only recently been invited to the table.
“Cities all over North America threw billions at Amazon HQ2, but building an innovation cluster in Toronto could put us at the forefront of the new field of technology—more important than AI, more important than cryptocurrency,” explains Richard Florida, a professor at the University of Toronto’s School of Cities.
Florida is also the cofounder and editor-at-large of The Atlantic’s CityLab and author of The Rise of the Creative Class and The New Urban Crisis. In his view, one of the world’s biggest technology companies just offered to build the world’s leading smart city technology hub in a “second- or third-tier” technology cluster, the exact kind of opportunity cities like Toronto work so hard building their tech industry cred for.
He says that the project would instantly catapult it to the top of what may prove to be the most important tech sub-industry of the future, without asking for the billions in taxpayer subsidies that often accompany such opportunities. Sidewalk Labs intends to invest $3.9 billion to build the smart city project in Quayside as well as an Urban Innovation Hub on the western portion of neighboring Villiers Island, and share 10% of the profits that result from any innovations that emerge with the Canadian government over the next 20 years. “It was the first time I’ve ever seen a company offer for a city to participate in the upside of that joint investment,” says Florida. “That should be a posture that every city should take,” he says.
According to Florida, Sidewalk Labs’ project is likely to happen, if not in Toronto than elsewhere. He fears the growing backlash against the organization threatens to not only discourage Sidewalk Labs from operating in Toronto, but could send a signal to the global technology community that Toronto is closed for business.
Balsillie, however, takes the opposite view. “If they approve this thing, it will be universally derided, and Toronto’s reputation and future prospects will materially and irreversibly erode,” he says.
Outsiders might consider an argument about civic reputation to be of little consequence, but Torontonians take this subject seriously. “We are having our Sally Field moment—’they like me, they really really like me’—we are so massively insecure,” says John Ruffolo, founder and former CEO of the venture investment arm of one of Canada’s largest pension funds, OMERS Ventures.
Ruffolo left OMERS in 2018, and now sits with Balsillie as co-chairs of the Council of Canadian Innovators. He also helped OMERS lead a competitive and ultimately unsuccessful bid for the land, and was a member of Waterfront Toronto’s volunteer Digital Strategy Advisory Panel before resigning his position in July over what he describes as an “overreaching” nondisclosure agreement.
“Many members of the tech community that I have spoken with, and especially those who are younger, are naive; They’re getting seduced by flying cars and all this sexy tech stuff, but they’re blind to how the business model actually works,” Ruffolo continues. “The irony is, at the end of the day, it’s being designed to stifle Canadian innovation.”
The Urban Innovation Institute, which the proposal says will be “designed in collaboration with local academic institutions,” will offer a platform for new smart city innovations. Ruffolo likens it to the Apple App store, suggesting that while developers will be invited to build their own products, the underlying platform is still owned and controlled by Sidewalk Labs.
He’s concerned that the company would have the ability to favor developers and startups within the Alphabet or Google portfolio, or charge a toll to companies trying to compete.
Doctoroff, however, says the organization is taking a completely open approach to digital innovation, adding that Sidewalk Labs is not looking to extract tolls from those who are granted access to the data. “That has been a consistent mischaracterization of our approach,” he says. “Our expectation is that the vast, vast majority of the infrastructure will all be completely open, that anyone will be free to build upon this platform, that whatever people build—whatever data ultimately gets approved to be used by the Urban Data Trust—will be theirs.”
Where we go from here
One of the major discrepancies between what Sidewalk Labs is proposing and what Waterfront Toronto has said it’s prepared to offer is the size and scale of the project.
The RFP was specifically focused on the 12 acres known as Quayside, but left the door open to “scale up” the project in the future. Sidewalk Labs’ nearly 200-page response to the RFP describes how, “expanding the project area from Waterfront Toronto’s 12 acres to the full 33 acres enables innovation within Quayside to expand from the building level to system and neighborhood scale.”
In documents leaked by the Toronto Star, it was revealed that the company had also made plans for the surrounding Eastern Waterfront, totaling nearly 350 acres. The recently released MIDP, however, only outlines plans for the development the 12-acre Quayside lands and the 18 acre area of Villiers West.
The MIDP proposes turning Villiers West into an “Idea District” that will house a new Google Canada headquarters and a nonprofit “Urban Innovation Institute.” The company says the Idea District is necessary to ensure the economic viability of the project, but Waterfront Toronto says the City-owned land isn’t theirs to offer, and they can’t promise it to Sidewalk Labs before the Quayside project is built.
“The concept of the Idea District is premature and that Waterfront Toronto must first see its goals and objectives achieved at Quayside before deciding whether to work together in other areas,” reads an open letter written by Waterfront Toronto chairman Steve Diamond, published only days after the release of the MIDP.
The size and scale of the project is just one of the issues that needs to be resolved before October 31 in order for the project to proceed. The MIDP also proposes that Sidewalk Labs will be the lead developer of Quayside. “Should the MIDP go forward, it should be on the basis that Waterfront Toronto lead a competitive, public procurement process for a developer(s) to partner with Sidewalk Labs,” writes Diamond.
There’s also the matter of extending public transit to the Quayside area prior to development. Doctoroff had previously stated that “if there is no light rail through the project, then the project is not interesting to us,” but Diamond writes Waterfront Toronto is unable to make that commitment, as it has no jurisdiction over public transit. The organization’s board chairman also warns that Waterfront Toronto “will require additional information to establish whether they [Sidewalk Labs] are in compliance with applicable laws and respect Waterfront Toronto’s digital governance principles.”
Doctoroff, however, doesn’t believe the disputes are as significant as had been reported, suggesting such disagreements should be expected from a project of this size, scale, and level of complexity.
“If both sides are reasonable and flexible—which I know we’re prepared to be and I believe Waterfront Toronto is—then we should be able to resolve those issues,” he says.
Even if many questions remain unresolved about Sidewalk Labs’ plans for Toronto, the fact they’re getting asked is important in itself. Smart city technologies are only getting more sophisticated, and most governments, not to mention their citizens, are ill prepared to consider the implications. A world where technology is embedded in municipal infrastructure is not far off, and in some ways it’s already here. But how we manage these capabilities to minimize the risks and maximize the rewards is still far from settled. Whether the project moves forward in Toronto, elsewhere, or not at all, the world should pay close attention.