Econ_May_05

The Economist

May 5th 2018

Business 63

UAYSIDE, an area of flood-prone land

stretching for12 acres (4.8 hectares) on

Toronto’s eastern waterfront, is home

to a vast, pothole-filled parking lot, low-

slung buildings and huge soyabean si-

los—a crumbling vestige of the area’s by-

gone days as an industrial port. Many con-

sider it an eyesore but for Sidewalk Labs,

an “urban innovation” subsidiary of Goo-

gle’s parent company, Alphabet, it is an ide-

al location for the world’s “first neighbour-

hood built from the internet up”.

Sidewalk Labs is working in partner-

ship with Waterfront Toronto, an agency

representing the federal, provincial and

municipal governments that is responsible

for developing the area, on a $50m project

to overhaul Quayside. It aims to make it a

“platform” for testing how emerging tech-

nologiesmight ameliorate urbanproblems

such as pollution, traffic jams and a lack of

affordable housing. Its innovations could

be rolledout across an 800-acre expanse of

thewaterfront—an area as large as Venice.

First, however, Sidewalk Labs is plan-

ning pilot projects across Toronto this sum-

mer to test some of the technologies it

hopes to employ at Quayside; this is partly

to reassure residents. If its detailed plan is

approved later this year (byWaterfront To-

ronto and also by various city authorities),

it could start workat Quayside in 2020.

That proposal contains ideas ranging

from the familiar to the revolutionary.

There will be robots delivering packages

and hauling away rubbish via under-

ground tunnels; a thermal energy grid that

does not rely on fossil fuels; modular

buildings that can shift from residential to

retail use; adaptive traffic lights; and snow-

melting sidewalks. Private cars are banned;

a fleet of self-driving shuttles and robo-

taxis would roam freely. Google’s Canadi-

an headquarterswould relocate there.

Undergirding Quayside would be a

“digital layer” with sensors tracking, mon-

itoring and capturing everything from

how park benches are used to levels of

noise to water use by lavatories. Sidewalk

Labs says that collecting, aggregating and

analysing such volumes of data will make

Quayside efficient, liveable and sustain-

able. Data would also be fed into a public

platform through which residents could,

for example, allow maintenance staff into

their homeswhile they are at work.

Similar “smart city” projects, such as

Masdar in the United Arab Emirates or

South Korea’s Songdo, have spawned lots

of hype but are not seen as big successes.

Many experience delays because of shift-

ing political and financial winds, or be-

cause those overseeing their construction

fail to engage locals in the design of com-

munities, says Deland Chan, an expert on

smart cities at Stanford University. Dan

Doctoroff, the head of Sidewalk Labs, who

was deputy to Michael Bloomberg when

the latterwasmayor ofNewYorkCity, says

that most projects flop because they fail to

cross what he terms “the urbanist-tech-

nologist divide”.

That divide, between tech types and

city-planning specialists, will also need to

be bridgedbefore SidewalkLabs can stick a

shovel in the soggy ground at Quayside.

Critics of the project worry that in a quest

to become a global tech hub, Toronto’s pol-

iticians may give it too much freedom.

Sidewalk Labs’s proposal notes that the

project needs “substantial forbearances

fromexisting [city] laws and regulations”.

It is not yet knownwhat business mod-

el Sidewalk Labs plans for Quayside. Rohit

Aggarwala, its head of urban systems, said

at a public meeting in March that it is

“frankly a little unclear” what it will be. Mr

Doctoroffsays the firmmightmakemoney

by licensing the products and services it de-

velops inToronto and selling themto other

cities. It is uncertainwhether Torontonians

who contributed data to hone the services

would share the revenue.

Privacy concerns will doubtless arise—

over what data the sensors at Quayside

will hooverup,whowill own them,where

they will be housed and so on. For now,

SidewalkLabs has said itwill not use or sell

personal information for advertising pur-

poses and that the data will be subject to

“open standards”, allowing other firms

and agencies to make use of it. Sidewalk

Labs andWaterfront Toronto have brought

in a former federal privacy commissioner

and a former privacy commissioner ofOn-

tario as advisers.

But privacy experts call such assur-

ances insufficient, because Canada’s legal

frameworks for data privacy and security

lag behind the latest innovations from tech

firms. “You can always choose whether or

not to download an app on your phone,”

says Kelsey Finch at the Future of Privacy

Forum, a think-tank. “You can’t easily opt

out of the community that you live in.”

Sidewalk Labs

Streets ahead

TORONTO

AnAlphabet subsidiarydesigns awired, robot-servedneighbourhood

ary that in 2020 it will move assembly of

its Ram pickup trucks fromMexico back to

Michigan. That would sidestep the imposi-

tion of tariffs of 25% ifAmericawere to exit

NAFTA

. Its plant inMexico, which has free-

trade agreements with a host of countries,

will be used to make vehicles for export to

othermarkets around theworld. An execu-

tive at a giant American industrial firm

says that iftariffs increase the cost ofmanu-

facturing substantially at its American

plants, it will shift some production to its

plants in Europe or Asia.

In many cases, then, American fac-

tories will not benefit. Eric Hillenbrand of

Alix Partners, a corporate-restructuring

firm, confirms reports that firms of various

nationalities which used to import raw

metals and process them in America (for

example, bending or forging steel or alumi-

nium into complex shapes) are preparing

to shift that value-added work out of the

country owing to the metals tariffs. Work-

ing out what the Trump administration in-

tends on trade is hard enough.Working out

what effects it will have is even tougher.

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