Sidewalk Labs Chose Toronto Despite Pushback From Larry Page

Mr. Page, who has long been interested in flying cars, pushed for a mix of proposals for the Sidewalk project that were futuristic technologically, along with ideas that Sidewalk leaders considered retrograde from an urban-planning perspective. His suggestions included restricting heights for buildings and developing houses that could move on wheels, the people said.

Mr. Doctoroff, former CEO of Bloomberg and deputy mayor of New York City, and his team of former New York real estate power brokers preferred denser environments and a vision that wasn’t too far outside the mainstream. (Even the company’s most noteworthy pitches include ideas already being tested in the real world, such as prefabricated housing, digital kiosks and self-driving shuttles, according to its “project vision” released Tuesday.) Mr. Doctoroff was eventually successful in convincing Alphabet’s top brass to approve its Toronto plan, in part because Sidewalk had already established so much momentum building a relationship with the Canadian city, the people said.

Alphabet’s investment in Toronto is for now relatively modest. Sidewalk Labs said Tuesday it would spend $50 million for planners and consultants to study real estate and tech development on 12 acres in the Toronto waterfront neighborhood of Quayside (pronounced Key-side) but could expand its work much further, including becoming the master developer for hundreds of acres of land nearby. Alphabet Chairman Eric Schmidt helped make the announcement Tuesday, alongside Mr. Doctoroff and Canadian Prime Minister Justin Trudeau. Under the agreement, Sidewalk and a Toronto government agency will spend the next year planning a development that will include housing, offices and tech pilot projects like self-driving shuttles.

“The degree to which Sidewalk can build an innovative and inclusive district means putting urbanism first and technology second. That’s why it’s good Dan is leading it rather than a typical Google-ite, not to be critical of them,” said Richard Florida, a prominent Toronto-based urban researcher who provided input to Sidewalk Labs in the early days of the project.

Mr. Florida praised the project for its willingness to follow city guidelines rather than making cities bid for the development, like Amazon’s proposed second headquarters. Mr. Doctoroff’s vision is, “How do you build a laboratory for a creative, inclusive, mobile neighborhood? How do you experiment not only with sensors but with what the optimal density might be?” Mr. Florida added.

Urban Development Questions

The disagreements between Mr. Page and Mr. Doctoroff, as well as Sidewalk’s Toronto project more generally, highlight broader issues that will play out as technology permeates cities—how cities are built, how data is used and how much say tech companies have in urban development. Mr. Doctoroff often talks publicly about his company’s efforts to close the gap between urban planners and technologists to help improve cities. Many of Sidewalk’s initial plans are likely to please city planners, such as building roads for bikes and pedestrians rather than privately owned cars. “The Eastern Waterfront will be the first district where the only vehicles are shared and self-driving, where buildings have no static use, where streets are never dug up,” according to the vision plan.

To succeed in Toronto and elsewhere, Mr. Doctoroff and others at Sidewalk will have to continue to balance their roots in real estate, politics and technology, particularly in places that might be wary of a big tech company having so much influence. Maintaining a positive relationship with Toronto is key for Alphabet at large, which said Tuesday it would commit to expanding its Canadian headquarters there and invest in urban-focused startups. Sidewalk’s aims are ambitious, particularly its expectation that it can use both technology and policy tools to lower costs of living in one of North America’s most expensive cities by 14%.

'How do you build a laboratory for a creative, inclusive, mobile neighborhood?’

Mr. Doctoroff will have to keep Alphabet leaders like Mr. Page and CFO Ruth Porat interested in the project’s moneymaking and tech potential. Mr. Page for years has envisioned city-building as a worthy project as more of its business gravitates from search engines to the real world. But how much exactly Sidewalk will invest in Toronto remains an open question. A Google spokesman didn’t respond to a request for comment for this article.

Revenue Potential

So far, Sidewalk has shown financial promise mostly through its investment in Intersection, which sells ads and builds technology for the digital kiosks installed throughout New York City. In Toronto, executives at Sidewalk Labs see potential in making money off rising real estate values if they own buildings or land inside the development, people familiar with their thinking said. It also could license technology it develops to other cities once it has been tested in Toronto, they said.

Over the next year, Sidewalk Labs and Waterfront Toronto, the agency that owns the land on the edge of Lake Ontario, will develop planning details and talk to community members, starting with a town hall early next month “to introduce Dan Doctoroff and other folks at Sidewalk Labs as partners,” said Waterfront Toronto spokeswoman Carol Webb. She said Sidewalk Labs may develop buildings themselves, and some land might go to other developers. In the meantime, Sidewalk might test various urban technologies in Toronto, she said.

The Toronto announcement represents a key moment for Sidewalk, which formed in New York City in 2015 just before Google morphed into Alphabet as a holding company. It has fewer than 85 employees, mostly based in New York’s Hudson Yards, a new ground-up development on Manhattan’s west side that Mr. Doctoroff helped shape when he was deputy mayor. Sidewalk lists jobs on its website for executives like a director of real estate investments, a director of mobility and a product management role for “Neighborhood Assistant, an app that creates a more responsive and delightful urban experience for residents in our innovation district.”

The two-year road to the Toronto announcement had speed bumps. Mr. Doctoroff apologized to employees last year for being “distracted” from Sidewalk because he had to run day-to-day operations at Intersection, which was without a CEO. (Mr. Doctoroff is still chairman there.)

Inside Sidewalk, Mr. Doctoroff paid close attention to case studies of how previous efforts to build futuristic cities have failed, such as Brasilia and Songdo City in South Korea. He gravitated to the idea of buildings having flexible uses, like loft spaces with movable walls and zoning rules that allowed an office building to become an apartment building when necessary, according to a person close to him. Some of those plans were highlighted in Sidewalk’s vision plan Tuesday.