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Bennat Berger headshot

Sidewalk Labs’ Failure and the Future of Smart Cities

Sidewalk Labs' rocky experience in Toronto can provide a paint-by-numbers guide of what to (not) do when planning a sustainable urban utopia.
By Bennat Berger
Sidewalk Labs

In early May, Sidewalk Labs’ ambitious plans to build a sustainable utopia in the heart of Quayside, Toronto sputtered to a sudden and unceremonious end. News of the dropped project first broke when the company’s CEO Daniel L. Doctoroff took to Medium to explain that the economic impact of COVID-19 had made it financially impossible to continue the resource-intensive project. 

“For the last two-and-a-half years, we have been passionate about making Quayside happen,” Doctoroff wrote. “But as unprecedented economic uncertainty has set in around the world and in the Toronto real estate market, it has become too difficult to make the 12-acre project financially viable without sacrificing core parts of the plan we had developed together with Waterfront Toronto to build a truly inclusive, sustainable community.”

Doctoroff tried to soften the news by pointing out that the urban innovation and green-living concepts Sidewalk Labs developed during its time at Quayside could be applied further down the road, when another company takes on the challenge of building a smart city. But, while not technically wrong, his point feels almost hollow in the face of the project’s failure. To borrow a quote from Curbed’s Alissa Walker, “If a well-funded Google subsidiary can’t build affordable, low-emission housing, who can?” 

When viewed through a pessimistic lens, Sidewalk Labs’ exit seems to suggest that building a genuinely tech-forward, green-minded community is, at least for now, an impossibility -- and perhaps it is. But I would argue that just as the concepts developed during the now-defunct project can be applied to other smart city initiatives, so too can the project’s successes and controversies inform the approach that builders use in the future. If we take a retrospective approach, Quayside’s rocky history can provide a paint-by-numbers guide of what to (not) do when planning a sustainable urban utopia. 

Providing Context: What Was Sidewalk Toronto?

It’s worth outlining the broad strokes of what Sidewalk Labs hoped to achieve in Toronto. When the company first published its detailed plans in June of 2019, the project was heralded as “a neighborhood built from the internet up [...] the most innovative district in the world.” 

If plans had come to fruition, the neighborhood would have deserved the superlatives. Sidewalk Labs intended to construct ten new mixed-use buildings -- encompassing thousands of residential units -- out of mass timber. This material is more eco-friendly, quicker to produce, and cheaper than conventional construction materials. Besides the immediate benefit of increasing affordable housing stock, the construction project could have provided an industry-changing blueprint of how to make affordable green housing at a profit. 

Other notable intentions include reducing greenhouse gases by 89 percent, implementing a pneumatic trash collection system, designing a street system that would limit car use in favor of walking and biking, and installing public wifi. The new community would also have an extensive network of sensors that would have continuously collected urban data to help guide resource-efficient housing and traffic decision-making. 

According to reporting from the Verge, these and other developments would have helped create one of the largest eco-friendly communities in North America, extend no less than 44,000 new jobs to the Quayside area, and generate up to $4.3 billion in yearly tax revenue. Sidewalk Labs itself planned to invest $1.3 billion in the project and anticipated drawing up to $38 billion in private-sector investments within two decades. 

The benefits are evident. Sidewalk Toronto would have set a replicable example of what cities can do to boost affordable living and lessen their carbon footprint -- a worthy goal, especially given the world’s continued spiral into a climate crisis. So, how could Sidewalk Labs let the project go so entirely? 

Despite what Doctoroff and other Sidewalk Labs representatives say, COVID-19 probably wasn’t the sole reason behind the collapse, though it probably was the straw that broke the proverbial camel’s back. Instead, the forces that drove Sidewalk Toronto to failure were interpersonal: a lack of trust and transparency. 

Lessons Learned: Sidewalk Toronto Failed Due to (a Lack of) Trust

“The city is literally built to collect data about its residents and visitors,” the Atlantic’s Sidney Fussell wrote in a scathing 2018 critique of Sidewalk Toronto.

He isn’t wrong. If the Sidewalk Toronto project had come to fruition, it would have installed occupancy sensors into every home in the community to adjust temperature and minimize energy use throughout the day. It would have established an expansive network of cameras and used AI to analyze traffic patterns, monitor traffic speed, and predict collisions. Even the streets would collect data and respond accordingly; “smart” roadways would have used LED lights to dynamically change lane width to accommodate usage by different types of commuters.

These innovations promise safety, convenience, and energy-efficiency benefits -- and a distinct host of privacy concerns. According to The Atlantic, one former advisor and privacy expert quit the Sidewalk Toronto project after becoming concerned that Google would use the data its sister company collected to expand existing profiles of their online activity. The advisor left after project leaders “refused to unilaterally ban participating companies from collecting non-anonymous user data."

Sidewalk Toronto’s fall prompted some citizen groups to celebrate their advocacy efforts. “This outcome is a testament to the principled and courageous stance taken by citizens to protect Toronto from Google’s corporate takeover,” Thorben Wieditz, a representative for Block Sidewalk, told reporters for Curbed. 

The future of smart cities and Sidewalk Labs

However, proponents of the project have long been frustrated by the implication that Sidewalk Labs is driven by capitalistic greed. “We’re not going to gather up all Torontonians’ data and sell it, we’re not building Sensorville,” Micah Lasher, the head of policy and communications at Sidewalk Labs once commented

We face a Catch-22. Companies like Sidewalk need to gather data to create a green, tech-forward utopia that can provide comprehensive environmental and community benefits to residents -- and yet, those residents are unable to trust the intentions driving such surveillance enough to allow the project to proceed. Without trust, sustainable communities like Sidewalk Toronto will never come to fruition. 

So, what does this tell us about future smart city initiatives? From the get-go, project leaders need to address trust and transparency. They must adopt a near-nonprofit perspective that prioritizes social gain over profits to avoid accusations of corporate greed, and involve advocacy groups in their decision-making processes. Residents must understand how their data will be used, who has access to it, and what they can do to maintain their privacy in a space where data collection is a necessity. It seems an obvious truth, but it bears saying: when you build a smart city, you need to think as much about the residents as you do about the technology that powers it.

Image credit: Sidewalk Toronto

Bennat Berger headshot

Bennat Berger is a tech writer, investor, and real estate professional based in New York City. He currently stands as the co-founder for the NYC-based real estate firm Novel Property Ventures, as well as the sole founding partner for Novel Private Equity, a PE firm that specializes in guiding promising startups towards success. He has written extensively about the often-disruptive impact that innovative tech -- and, in particular, AI -- has on culture and business. You can find samples of his work in Fortune, VentureBeat, Entrepreneur, and The Next Web.


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