Alphabet's (NASDAQ:GOOGL) (NASDAQ:GOOG) Sidewalk Labs has decided to abandon an effort to build a high-tech neighborhood in Toronto.

The New York-based subsidiary invested $50 million to develop a 1500-page master plan for a so-called "smart city" located on the Toronto waterfront. The project would have fundamentally transformed this area, adding features such as moving pavement and smart garbage cans.

Sidewalk Labs, which had invested $50 million in the project, blamed its cancellation on COVID-19. However, the project had faced criticism and opposition from the beginning.

Sidewalk had initially planned to make this neighborhood the flagship testing ground for its other projects. It would have also helped Toronto, which had hoped to attract a Google headquarters.

Man holding model of city displaying the words "Smart City."

Image source: Getty Images.

As with other endeavors implemented by the Google parent, many people expressed concerns over data privacy. Others believed the project would claim too much land. However, Sidewalk had already agreed to scale back the initial plans for a 190-acre project to just 12 acres.

Toronto mayor John Tory expressed disappointment at the company's decision. However, he has not given up on high-tech city development projects. "I am extremely confident there are partners eager to undertake this endeavor," said Tory.

Others saw this as welcome news, among them, the former co-CEO of Blackberry Jim Balsillie. "This is a major victory for the responsible citizens who fought to protect Canada's democracy, civil and digital rights, as well as the economic development opportunity," said Balsillie, who also dismissed the project as "surveillance capitalism."

Despite this setback, Sidewalk Labs still plans to continue its other innovation projects.

Investors appeared to dismiss the news. The tech stock rose by 1.8% in Thursday trading to close at $1,369.28 per share.

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