Big Tech’s smart city power grab

Cities need to become smarter if they are to support soaring populations. The UN predicts that 68% of the world’s people will live in urban areas by 2050, up from 55% today. And with the human population expected to near 10 billion by 2050, making efficient use of every inch of city space is high on the agenda of local governments.

All this makes for a market with lucrative potential for the companies providing the technology solutions powering the cities of the future, from smart waste management to autonomous delivery robots. According to GlobalData estimates, the smart city market will be worth $833bn by 2030, up from $441bn in 2018.

More specialised industrial companies such as Siemens, Hitachi and General Electric have traditionally ruled this sector. However, powerful tech companies from conventionally consumer markets are increasingly expanding onto industrial firms’ turf in pursuit of new revenue streams.

“Big Tech wouldn’t be in smart cities if it didn’t see it as a money-making opportunity,” says David Bicknell, principal analyst at GlobalData’s thematic research team and smart city expert.

But what tech companies see as diversification, critics perceive as a power grab in nascent markets from companies already accused of throttling competition in their own sectors.

“There are already fears that companies that gain an early foothold in smart cities will come to dominate so-called urban technology, just as the early days of the internet were dominated by proprietary solutions before a more open approach took over,” noted GlobalData thematic researchers in a 2019 report on smart cities.

Google-owner Alphabet and Amazon are, for instance, making moves into smart cities while simultaneously already battling multiple antitrust probes on both sides of the Atlantic. Their detractors fear that their financial muscle and deep data resources could empower them to control the growing industry.

Google has captured 90% of the search engine market, which in turn allows it to form one half of the Facebook-Google digital advertising duopoly. Now, Alphabet is trying to do the same in smart cities.

Among the tech giant’s many projects is Sidewalk Labs, an urban planning and infrastructure subsidiary. Its mission is to “make cities more sustainable and affordable for all” by creating products, investing in new companies and taking an active role in designing city spaces.

Ecommerce giant Amazon has a smart cities project in the works, also called Sidewalks. It uses select Amazon home devices to create a “neighbourhood network” running on Bluetooth Low Energy and other frequencies to extend internet connection beyond the home.

AWS, the online retailer’s cloud computing powerhouse, is also working with the City of Chicago on OpenGrid, a real-time, open-source situational awareness program intended to improve the efficiency of city operations.

It is often said that data is the new oil. Less often, it is pointed out that data, unlike oil, has a potentially infinite supply. As more and more sensors are added into city spaces the vendors controlling that data pool could, in theory, use it to gain a competitive advantage in other areas. Amazon has form in this area; one of its antitrust charges accuses it of benefiting from its dual role as platform for other sellers and a retailer of its own goods, using third-party data to inform its own retail decisions.

Even with anonymised datasets, a tech company could glean aggregated insights that boost its business interests elsewhere – and make it harder for smaller startups to break into the smart city space. This also presents concerns about how the technology could be used by authoritarian regimes to control their citizens.

Beyond the business ramifications, privacy campaigners have been ringing the alarm bell over Big Tech’s growing role in urban spaces.

“We have observed the emergence of a narrative that says systematic data generation, collection and centralisation are the answers to all problems,” says Eva Blum-Dumontent, senior research officer at Privacy International. “This narrative – promoted by companies that sell data processing and AI to local governments – has led to the very real and concrete transformation of our cities into increasingly surveilled public spaces, as well as places of exclusion and discrimination.”

Surveillance facilitated by Big Tech is most prominent in China, where computer vision, facial recognition and AI track the movements of citizens and feed them into the Skynet mass-surveillance network. This, in turn, is closely linked to China’s Social Credit System, a government database that scores citizens on their trustworthiness by following their every move and interaction across the city.

These privacy concerns are intimately linked to the involvement of China’s homegrown tech giants in urban spaces. In 2018 four Chinese tech giants – Ping An, Alibaba, Tencent, and Huawei – launched PATH, an initiative to help 500 Chinese cities become smart cities.

In Hangzhou, ecommerce behemoth Alibaba operates its City Brain system, which uses AI to manage transportation networks. It was given control of 104 traffic light junctions in the city’s Xiashoshan district and its algorithms were able to increase traffic efficiency by 15% in its first year.

While Alibaba Cloud provides the software, the city owns the data. But when the state is authoritarian, it raises further questions about the relationship between Big Tech and big government.

This murky relationship moved to centre stage for Chinese telecommunications giant Huawei. One of China’s biggest tech players, it is one of the leading providers of 4G and 5G equipment. Until a couple of years ago its spread across the globe seemed unstoppable. That growth began to unravel in 2019 after the questioning about Huawei’s ties to the Chinese state reached a boiling point.

Critics pointed to its founder’s past in the Chinese military, the state subsidies it had received and Chinese national security law that could, in theory, compel the company to give government access to communications on its network. Huawei has consistently denied accusations that it poses a national security threat. The absence of a smoking gun did not stop the company from being ostracised across the West. Above all, the saga underscored an admission from Western governments of the critical role that tech companies play in city infrastructure – and the risks they could pose, real or hypothetical.

Smart city surveillance is not limited to China. In 2019, developers at King’s Cross, London, sparked outrage after it emerged passersby were being monitored by live facial recognition installed in CCTV cameras. The system had been installed in secret and without any oversight from the police, prompting an investigation by the UK’s data regulator.

While the live facial recognition software was not provided by Big Tech, such companies are providing surveillance systems elsewhere. More than 2,000 police and fire departments in the US have partnered with Amazon’s Ring camera system, which effectively turns a consumer camera into an extension of a state surveillance network – all facilitated by Big Tech. Amazon has given out thousands of free Ring devices as part of an initiative with UK police.

Amazon’s relationship with law enforcement doesn’t stop at hardware. Its facial recognition software, Rekognition, is based on AWS technology and had been sold to law enforcement across the US. In June 2020 it put a one-year moratorium on selling Rekognition to police after civil liberty groups raised concerns about the tech’s potential racial bias. IBM, facing similar pressures, also paused the sale of its own facial recognition software to police.

These reactions, along with protestors in Hong Kong tearing down smart streetlights, demonstrate a fierce backlash to smart city technology when citizens believe the technology poses more risks than benefits. But there is one episode that has become a case study for backlash against Big Tech in smart cities.

Google Sidewalk Lab’s Quayside project in Toronto was championed by Canadian Prime Minister Justin Trudeau and Google co-founder Eric Schmidt as a community built “from the internet up”.

First proposed in October 2017 as a 12-acre neighbourhood, it aimed to become a truly smart city with features such as “snow-melting roadways”, an “underground delivery system” and homes that used cutting-edge wood-frame towers to make housing more affordable

But over the next two years the project unravelled. First, tensions mounted when Sidewalk Labs increased the size of the neighbourhood to 190 acres. There were also disagreements in vision between the Google company and Waterfront Toronto, the organisation managing the renovation. But the biggest backlash came from residents, who feared their data would be collected and stored by the tech goliath.

“No matter what Google is offering, the value to Toronto cannot possibly approach the value your city is giving up,” wrote venture capitalist Roger McNamee in a letter to the Toronto city council at the time. “It is a dystopian vision that has no place in a democratic society.”

Despite promises by Google that citizen data wouldn’t be shared with third parties, the backlash continued.

The project closed in May 2020, with the uncertainty of the Covid-19 pandemic given as a reason. But GlobalData’s Bicknell says the biggest factor in its demise was “data privacy”. And the episode could have wider implications for smart city projects, he says.

“The failure of that project overshadows other good smart cities engagements,” he explains. “It was a high-profile project and the data privacy concerns will chime with other cities and citizens.

Big Tech’s role in smart cities seems unlikely to go away. So how can it be ensured that it works for citizens and not for Big Tech’s balance sheet?

First, it is worth highlighting that not all smart city projects pose immediate risks, whether it’s data privacy or market dominance. For example, last year Vodafone partnered with SES Water to fit water pipes with narrowband IoT sensors that monitor pressure, flow, temperature and acoustic signals to detect leaks. The project aims to reduce water leakage by 15% in five years, which could save billions of litres of water per day – something residents are unlikely to take issue with.

As countries look to reopen from the pandemic, the management of city spaces will be key to ensuring a balance between safety and a return to normality. Smart city tech could be part of that solution, but according to GlobalData’s Bicknell it would be wise for Big Tech to be cautious in their involvement.

“Maybe cities, for now, just need to be resilient rather than smart” he explains. “Big Tech can help. It can bring new thinking, scale and ideas, for good. What it can’t do is be seen to be a behemoth overshadowing projects, which is arguably what happened in Toronto. Big Tech wasn’t the solution. It was the problem.”

Justin Bean, global director of smart cities and smart spaces at Hitachi Vantara, tells Verdict that there’s clearly a “gap in trust between citizens, business and government”.

He believes that the key to making smart cities work is to demonstrate the benefits to the local community and wider society from the offset.

“This means clearly setting out the goals and objectives that will be achieved through deployment of technology or digital solutions,” he says. “And we must work together to create awareness and encourage citizen participation – after all, solutions must be developed first and foremost with the citizen’s concerns in mind. It’s a collaborative process.”

He adds that the “onus is on companies and governments to ensure that any citizen data privacy concerns are addressed in a transparent manner”.

Another way to curtail the risks of Big Tech in cities is to introduce specific smart city laws and regulations. However, as GlobalData analysts noted in a 2019 smart cities report, this could be a challenge: “Each problem being tackled, in different geopolitical locations and cultures, will require different local laws.”

For Privacy International’s Blum-Dumontent, keeping the public involved is crucial.

“It is essential that smart city projects happen following thorough consultations with the public to ensure the projects answer their actual needs. Transparency is also one of the key elements, as well as data minimisation,” she said.

Bicknell agrees that transparency is one of the best ways to keep Big Tech’s role in smart cities in check. He points to the Smart Cities Challenge in Canada, which forced companies to make their applications public via a municipal website.

“That created a more open process and generated less suspicion of Big Tech motives,” explains Bicknell. “A bit of humility and a willingness to listen to objections wouldn’t go amiss.

“Maybe Big Tech needs to act a bit more like Small Tech.”