Sidewalk Labs project gained support from Trudeau in 2017 call ahead of bid process

Open this photo in gallery:

Google parent Alphabet Inc. gained support from Justin Trudeau for its plan to build a technology-driven community in Toronto after a private, undisclosed call between the Prime Minister and the company’s chairman before the project was ever made public.

The conversation took place in January, 2017, two months before the project was open for bidders, and was not pro-actively disclosed by the Prime Minister’s Office, Alphabet, Google or its city-building affiliate Sidewalk Labs – nor was it documented in federal lobbying records. Yet the call set into motion events that created significant public skepticism toward a project with global consequences.

The project ended up being cancelled in the early months of the pandemic.

Sidewalk Lab’s end: How the downfall of a Toronto ‘smart city’ plan began long before COVID-19

The conversation was described in a redacted 2017 memo to the Prime Minister, which was first obtained under freedom-of-information legislation by The Globe and Mail in 2018 – but only revealed after a reporter spent three years pushing the Office of the Information Commissioner of Canada to have the memo unredacted.

Nine months after the call between Mr. Trudeau and Eric Schmidt, the former chief executive of Google and one of the world’s most influential technology leaders, Sidewalk Labs won the right to plan a 12-acre community, called Quayside, on the edge of Lake Ontario in downtown Toronto. It was billed as a world-leading example of forward-thinking city building with a Big Tech partner, and Mr. Trudeau showed great excitement at the October, 2017, Quayside announcement.

Instead, the project became a cautionary tale for what can go wrong when a digital giant tries to expand its influence into the physical world. Sidewalk Labs courted an unending stream of controversies as it sought government-like powers and access to some of the most valuable underdeveloped real estate in North America – while stirring debate over the future of privacy and the complex power dynamics between governments and corporate behemoths.

The call between Mr. Trudeau and Mr. Schmidt is revealed in the Globe reporter’s forthcoming book, Sideways: The City Google Couldn’t Buy, which will be published by Random House Canada this week.

Read an excerpt from Josh O’Kane’s Sideways: The City Google Couldn’t Buy

The pair’s relationship was criticized for years by Sidewalk Labs’ biggest opponents, who argued that Canadians deserved a clear account of their conversations, in order to ensure that the project was tendered competitively and in the best interests of the public.

Sidewalk Labs’ Toronto project was cancelled as the company struggled to make its economics work across just 12 acres, as real estate markets worldwide were thrown into disarray.

The Privy Council Office released an unredacted version of the 2017 memo to Mr. Trudeau to The Globe reporter as the book approached publication. It showed that on Jan. 16, 2017, Mr. Trudeau had a call with someone from Alphabet to discuss its “interest in partnering with Waterfront Toronto in creating a smart city using only autonomous vehicles.”

Waterfront Toronto was the tripartite government agency steering the project, and says it was not apprised of the call – which took place two months before the agency issued a request-for-proposals for the land. The agency has consistently maintained that it ran a fair, competitive and transparent tender process for the 12 acres of land in question on the eastern downtown lakeshore.

Though applicants were prohibited from speaking with politicians during the process, the call took place before the tender period – bypassing the no-communications rule.

Waterfront Toronto declined to comment beyond acknowledging it only learned of the call between Mr. Trudeau and Mr. Schmidt when told by a Globe reporter.

The call was also never previously disclosed to the public, including after The Globe asked the PMO in 2019 about Mr. Trudeau’s conversations with Google and Alphabet after viewing the original redacted memo. At the time, the PMO said that Mr. Trudeau regularly engages with global business leaders with an eye toward economic development. Subsequent memos obtained from 2017 indicated strong interest by the PMO in the economic development activities Sidewalk Labs could bring to Canada.

The Globe’s 2019 query to the PMO attempted to clarify widespread speculation that the controversial Sidewalk Toronto project had been secretly influenced by the Prime Minister’s Office, after comments by Mr. Trudeau at its October, 2017, announcement that he and Mr. Schmidt had been “talking about collaborating on this for a few years now. Seeing it all come together today is extraordinarily exciting.”

After The Globe shared details of the unredacted memo, the Prime Minister’s Office subsequently confirmed its records showed that the call was with Mr. Schmidt, despite not providing details when earlier asked. (Mr. Trudeau’s office and Sidewalk Labs have each said there were no subsequent conversations while the project was open to competition.)

This lack of transparency created a vacuum into which misinformation could flow and emboldened opposition to a project that Ottawa had hoped would draw significant attention and economic development to Toronto. Instead, the world’s attention was drawn to the numerous calamities that unfolded.

“Transparency and integrity would have been helpful but the Trudeau government has never made a secret of its cozy relationship with Big Tech, especially Google, Amazon and Facebook,” said Jim Balsillie, the former co-CEO of BlackBerry predecessor Research in Motion, who was one of the biggest critics of how governments handled the project.

“Regardless of how the project was cooked,” he said, “Sidewalk Toronto became a global scandal because three levels of government, Google and an army of local cheerleaders got excited and ready to undermine Canadian civil and digital rights, as well as our economy and democracy.”

The federal government has said that one of the key principles of the Lobbying Act is that “the general public be able to know who is engaged in lobbying activities.” But there are major limitations to those rules, including that a call does not need to be entered on the registry if it is placed by a government official.

Alphabet, Google and Sidewalk Labs – which was disbanded and largely folded into Google in 2021 – have long said they followed all lobbying rules when interacting with the federal government. A Google spokesperson told the reporter in a comment for Sideways that the call was placed by Mr. Trudeau’s office, thereby bypassing the need to be recorded.

Daniel Gold, a consultant who studied lobbying systems including Canada’s as part of his PhD thesis, said in an interview that “I have argued, and quite a number of people have argued for quite a long time, that a truly transparent system would involve reporting by both the government officials doing the contacting, as well as the lobbyists.” As it stands, he said, Canada’s system is “not truly transparent.”

The federal government also inconsistently described the records it has kept about the January, 2017, call. After learning of Mr. Trudeau and Mr. Schmidt’s conversation, The Globe filed another access-to-information request to the Privy Council Office requesting any records from January, 2017, about the call.

Access-to-information staff from the Privy Council Office, which handles such information requests for the Prime Minister’s Office, then said staff could find no records about the call during the period when the call took place – despite the Prime Minister’s Office acknowledging by e-mail that it had records of the call.

The Sidewalk Toronto project was meant to be an exemplary public-private partnership that could show the world what the future’s cities might look like. It was set to feature wood-structured skyscrapers, energy-saving buildings and even garbage-moving robots. Instead, it became an example of how not to plan tomorrow’s cities.

A stream of prominent Canadians and Americans were fired or quit the project as it routinely went off the rails, while other unlikely allies, from Bay Street to activist circles as far away as Berlin, banded together to oppose the project. The Trudeau government began distancing itself from Sidewalk Labs soon after the controversies began to mount, leaving many Canadian opponents frustrated that Ottawa wouldn’t take ownership over a project that might have been smoother with clear federal policy.

The land at Quayside remains largely unchanged since Sidewalk Labs left, though Dream Unlimited Corp. and Great Gulf Group won the chance to build a more traditional development there last February. And Sidewalk Labs’ Toronto office, sitting at the elbow of that L-shaped plot of land, became something many urbanists might cringe at – a rental-truck depot.