For two years, Toronto has been the flashpoint for an epic battle over the future of cities worldwide. It may be premature to say that Toronto has won, but the new Sidewalk Labs plan unveiled Thursday is a clear sign that the city has held its own.

Big Tech’s efforts to drive innovation at the local level — data-driven technological fixes that promise (or threaten) everything from autonomous vehicles and smart transit to flexible architecture and engineered outdoor microclimates, all driven by high-speed networks, futuristic algorithms and a vast array of sensors — is forcing municipal governments to rethink everything from regulatory oversight to public realm data privacy to the complex dynamics of public-private infrastructure partnerships.

Until now, the tenor of Toronto’s civic experiment with Sidewalk Labs has been less like a partnership and more like a crisis negotiation. The Google sister company’s initial plan, delivered last June in a 1,524-page document, was accused of overreach for its 77-hectare “Innovative Development and Economic Acceleration” district in response to the RFP for the five hectare Quayside site. There was also relatively little engagement with the city’s existing tech ecosystem, environmentalists, and a number of other key representatives and groups in the community.

In the face of enormous pushback from government leaders, civic leaders and Torontonians, Waterfront Toronto’s new chair, Stephen Diamond, hit the reset button and changed the power dynamic. Sidewalk Labs had to scale back its ambition or the tri-government agency would walk away from the proposal.

Thursday’s open letter from Waterfront Toronto makes clear that Big Tech has blinked. The new version of the plan, just released, addresses the major criticisms that have been raised since June.

Here are some key changes in the new Sidewalk Labs proposal:

Real estate: Sidewalk’s role on the waterfront has shrunk from provider of advanced systems across the 77 hectare IDEA district and lead developer of Quayside and Villiers West, to the original five hectares at Quayside and will be required to partner with local real estate developers. Only when Quayside has proven successful would sale of additional public land be considered and would proceed through standard competitive procurement processes.

Intellectual property: The patent pledge now offers Canadian innovators a global licence to use Sidewalk Labs Canadian patents in their innovations. This is a big win for local innovators looking to export urban innovations globally.

Data privacy: Sidewalk has agreed no personal information collected will leave Canada and has eliminated its proposal for an urban data trust as well as the term “urban data.” Waterfront Toronto would now take the lead on data governance. The agency is intending to set up data standards along the line of its successful green building standards.

Fairer deal: Waterfront Toronto will receive fair market value at today’s valuation for the Quayside lands, which have appreciated significantly over the past two years of planning. The revenue sharing from intellectual property with Waterfront Toronto has also been adjusted to be based on revenues, rather than profits.

Canadian participation: Sidewalk has added procurement policies to prioritize Canadian businesses. Sidewalk Labs has upped its engagement with Toronto’s existing innovation hubs, and is intending to commission a report defining Toronto’s urban innovation ecosystem with recommendations on how to support its growth.

Of course, this is not a done deal. There remains a long road ahead, with a lot of potential stumbling blocks, before this proposal is approved and set in motion.

Waterfront Toronto still must do a detailed evaluation of the reworked plan and more public consultation based on its evaluation. Sidewalk Labs will have to submit development plan applications through the City of Toronto’s application process.

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On March 31, Waterfront Toronto is scheduled to vote on the proposal. The City of Toronto also must approve the plan, and specific aspects must be approved by other levels of government. Critically, citizens need to have a meaningful and ongoing role at the centre of the decision-making process.

But today, it seems fair to say the revised proposal outlined in the open letter is good news. Thanks to Steve Diamond’s leadership, Toronto is learning how to take a leadership role in negotiations with Big Tech, while Sidewalk Labs has heard and responded to the concerns of Torontonians. This is clearly in Toronto’s interest. It may also hold lessons for civic leaders elsewhere as they look to build the cities of the future.