With Toronto, Alphabet looks to revolutionize city-building

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Alphabet Inc. is best known for its signature product, the Google search engine. But it is useful to think of it as a company that builds platforms – software that serves as a foundation for a growing array of technologies and services that people use every day.

It practically owns the web advertising market through its search platform, it is a leading player in the smartphone ecosystem with its Android platform, it is a large player in the cloud-computing platform, not to mention playing significant roles in the race to build an autonomous-vehicle platform and with high hopes to do the same in the artificial-intelligence space.

With the announcement on Tuesday that its subsidiary Sidewalk Labs would develop a whole new district of Toronto as a working model of a new type of smart city, it's no stretch to say the company is trying to build a platform for the construction and organization of cities.

Indeed, a 2016 video that presented some of the ideas behind Sidewalk Labs was titled Reimagining the City as a Digital Platform. Sidewalk's chief operating officer, Anand Babu – who comes from Google's machine-learning division (software, AI) – describes a future of city design through which "digital technologies become a peer with concrete and with laws and regulation and taxes."

What Sidewalk wants to do is mash together the rules of software-platform development with urban design.

"Our model … is to pick off specific problems, try out solutions. As they get more promising, then we deploy capital and resources against it," Mr. Babu said. "We'll often decide to form companies around them and those could be very large."

Google intends to build a traffic-sensing network that will collect data from smartphones, embedded sensors and cameras to identify areas that could use more bike-sharing slots, or where a self-driving vehicle should be routed, or where a future pop-up store could find a market for its wares.

It's hoping to be the private garbage collectors of the data that describe what makes Toronto tick and recycle that data into solutions for how this and other cities can be run more effectively.

One way to understand what a platform to build cities looks like comes from an influential article, The Rise of the Platform Economy, published by researchers Martin Kenney and John Zysman in the spring, 2016, edition of Issues in Science and Technology.

The duo argued that the software platforms built by such companies as Amazon.com Inc., Facebook Inc., Google, salesforce.com Inc. and Uber Technologies Inc. move beyond the digital and "open the way for radical changes in how we work, socialize, create value in the economy and compete for the resulting profits … these platforms are in many cases disrupting the existing organization of economic activity by resetting entry barriers, changing the logic of value creation and value capture, playing regulatory arbitrage, repackaging work or repositioning power in the economic system."

Sidewalk is betting it can disrupt the nature of city-building in ways that will benefit both citizens and itself. It has offered to share its smart-city data with the city, but as Mr. Kenney, speaking on Tuesday, warned, what Alphabet shares in terms of the value it extracts as it converts the city's data into products will probably be a different negotiation.

"What's really important is the deals Toronto cuts with Sidewalk may set terms and conditions for the rest of the world," he says.

Alphabet executive chairman Eric Schmidt said on Tuesday the genesis of the thinking for Sidewalk Labs came from Google's founders getting excited thinking of "all the things you could do if someone would just give us a city and put us in charge," although he joked he knew there were good reasons that doesn't happen. He then related his reaction when the company discovered it had won the bid for the development of its city-as-a-platform model: "Oh my God! We've been selected. Now, it's our turn."