A "smart city" project in Canada has hit yet another snag, as mounting delays and privacy concerns threaten the controversial development along the Toronto's eastern waterfront.

The 12-acre Quayside project, a partnership between Google's Sidewalk Labs and the city of Toronto, has come under increasing scrutiny amid concerns over privacy and data harvesting.

This week, the US venture capitalist Roger McNamee warned that technology companies such as Google cannot be trusted to safely manage the data they collect on residents.

"The smart city project on the Toronto waterfront is the most highly evolved version to date of … surveillance capitalism", he wrote to the city council, suggesting Google will use "algorithms to nudge human behavior" in ways to "favor its business".