In this article the authors consider the contradictory effects of the digitalization process of urban media environment and implementing a wide range of «smart city» technologies, namely: the rapid increase in the speed and quality of communications, on the one hand, and the possibility of establishing total digital control over all transactions and movements carried out by urban dwellers, on the other hand. Thus, the new media environment and the service infrastructure of the city form a significant potential for improving the quality of life, but at the same time significantly reduce the scope of personal freedom and the possibility of creative development. This dilemma is revealed by the authors using an example of Singapore - one of the leaders in modern digital technological development. Another case considered by the authors in the article concerns the comparison of the specifics of urban digitalization policy models on the example of Moscow and St. Petersburg. The authors analyze them in the context of the new social, economic and political risks posed by the COVID 19 pandemic. The general conclusion is the need to ensure an institutional environment that reflects the new conditions of technological development and is based both on the principle of self-restriction of the technology introduction into a person’s personal space and on a new «digital» ethics.