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Sidewalk Labs's board approved a plan with Waterfront Toronto to develop one 12-acre piece of land, and they’ve made important concessions on how data and intellectual property will be handled.Fred Lum/the Globe and Mail

Big Tech blinked.

Thursday’s agreement between public agency Waterfront Toronto and Sidewalk Labs marks a new phase for the Google sister company’s ambitions – and maybe a new tone for the relationship between big tech and city governments.

The specifics are subtle, but it’s obvious that the balance of power has shifted. Sidewalk Labs now agrees that much of its flashy June proposal for Toronto’s waterfront, titled “Toronto Tomorrow,” is yesterday’s news. The company will work on developing only one 12-acre piece of land, and they’ve made important concessions on how data and intellectual property will be handled.

It’s a big step back from where the company stood this summer. The June plan was remarkably sketchy on details, but also made breathtaking demands: Sidewalk insisted that they/it would need a much larger 190-acre site to work with, bespoke governance, and, implicitly, a giant subsidy.

As we now know, thanks to The Globe and Mail’s reporting, this was building on 2016 internal discussions that envisaged the company stepping into criminal justice, healthcare and data-driven infrastructure.

All that is gone now, and good riddance. Waterfront Toronto’s chair, Steve Diamond, made it clear on Thursday that the project will enjoy “robust public scrutiny” and will be evaluated “in a process led by government.”

And “this is not yet a done deal,” Mr. Diamond said. “There is still work to be done.”

That work will involve just the smaller site named Quayside. Here, Sidewalk will continue to pursue its vision of a mixed-use development with buildings constructed out of mass timber; with a network of tunnels where robots would ferry packages and waste; where the streets would be “flexible” and closed off to most vehicles, except autonomous vehicles; and where a “digital layer” of sensors would help run the place and provide a stream of valuable data.

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Waterfront Toronto’s chair Steve Diamond, seen here on Oct. 31, made it clear that the project will enjoy 'robust public scrutiny' and will be evaluated 'in a process led by government.'Fred Lum/the Globe and Mail

How much of this will actually come to pass? We’ll see. Those elements will be evaluated now by Waterfront Toronto and then by city agencies.

This is how private-development projects are supposed to happen: A corporate actor asks government for permission to build something, and follows the rules.

For two years now, since Sidewalk announced a partnership with Waterfront Toronto, it’s been largely the other way around. The company’s initial proposal made a splash – remember those illustrations with the gondolas? – and it was a self-consciously Big Vision. It was a demand that the city capitulate to the unstoppable logic of technological progress, with Sidewalk Labs at the centre.

We now know how that turned out. First global sentiment shifted, with the Cambridge Analytica scandal shifting public opinion against the tech giants. Then, locally, Sidewalk Labs encountered strong pushback from some citizens, politicians and members of the Canadian tech sector. What had seemed like a gift – the presence of a world-leading company in Toronto – grew far more complicated.

But Sidewalk Labs didn’t seem to read the room. Even this year, when it released that big document, many details came as a surprise to Waterfront Toronto officials. “It’s an approach that was unique, and not one that I might have pursued in my experience as a lawyer and as a developer in wanting to obtain public approval,” Mr. Diamond of Waterfront Toronto said Thursday.

In other words: Sidewalk was tone deaf. Its effort in Toronto has been top-down, heavy on lobbying and PR. It has been consistently vague about its development plans, camouflaging a lack of technical and financial detail with rhetorical confetti.

Why? I’ve come to suspect that this is because many of its plans are only half-formed. The fact is that Sidewalk Labs as a company has little track record. And while its executives have experience with New York’s city government and on Wall Street, none have built a wood-products factory, or a district energy system, or a freight robot network.

Yet, some of their ideas are very good. In particular, the company’s low-carbon architecture and urban design vision, fed by gifted architects and planners, could make a real addition to the city.

In an interview Thursday, Sidewalk chief executive Dan Doctoroff sounded conciliatory. The company has made “a recognition that asking us to prove ourselves is not unreasonable,” he said. “It took time to understand that.” But the message has gotten through.

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