Sidewalk Labs' Pullout of Toronto Wasn't All About Finances

After spending at least 5 years of effort and more than $50 million on planning for Toronto’s waterfront, Alphabet company Sidewalk Labs has announced they “will no longer pursue the Quayside project.” Envisioned as a sustainable, affordable, tech-infused smart district, Sidewalk Labs cited financial uncertainties stemming from the coronavirus outbreak in their decision. Their ambitions were grand: sustainable high rises, heated streets, pneumatic trash collection, robotic deliveries, and loads of cameras and sensors. So, what happened?

The Tax Base Meets the Virus

Sidewalk Labs stated the financial uncertainty following the coronavirus outbreak as the principal reason for ceasing the Quayside project. This is a concern that other major smart city projects will face in the coming months. As economic activity decreases due to the coronavirus, so do the tax bases that many cities use to fund smart city projects. San Francisco, New York City, and London—cities known for expansive innovation programs—have all announced that municipal budgets will get a substantive rework in the wake of the coronavirus’ financial toll.

Smart city projects across the board are being affected, from the New York City Metropolitan Transportation Authority spending funds previously earmarked for capital improvements to micromobility companies announcing service suspensions and employee layoffs. Changes in the financial climate have led to scaling back smart city developments in places such as Masdar City in the United Arab Emirates and Eko Atlantic in Nigeria. With the economic consequences of COVID-19, it is a difficult financial time for Sidewalk Labs to launch a megaproject from which they expect returns.

It’s Not All About the Money

However, there are other likely reasons for Sidewalk Labs’ abandonment of the Quayside project though they were not mentioned in the company’s announcement. Sidewalk Labs was facing an incredible amount of public resistance, as evidenced by the activism of the Toronto-based group Block Sidewalk and a broad scope legal challenge over intrusions to privacy. The public was not clear on what level of oversight the municipal entity of Waterfront Toronto would have over the corporate entity. Original plans would have seen the data generated on public activities from cameras and sensors stored on Sidewalk Labs’ private servers. While subsequent efforts to assuage privacy concerns were introduced, the project never overcame the feeling of corporate surveillance for many.

More objections were raised about the development of the project in its entirety. While Toronto’s Waterfront area has long been considered for development, objections were raised about how much control of municipal land would be given over to an entity whose CEO once said the project “is primarily a real estate play.” Opponents of the project worried that the residents of the district would constantly play second fiddle to the whims of a tech giant.

The accuracy of these charges could be ceaselessly debated, but they are ultimately unimportant; public perception is key. Public resistance toward and distrust of the data privacy aspects of the project is likely a significant factor in Sidewalk Labs’ decision to pull out. Quayside is a reminder that the conversation about how to balance personal liberty and privacy with smart city data collection is nuanced. This dynamic will continue to play a role in smart city projects. Considering the likelihood of a discouraging financial climate over the next few years, corporations with development interests in the smart city space should pursue higher levels of civic engagement from the onset and proceed with an innovative, socially adroit development strategy.