Whether digitalization can deliver a better life is a core issue that requires careful consideration in the development of smart cities. While the comprehensive digital transformation of cities enhances operational efficiency, improves the quality of public services, and drives economic innovation, it also triggers legal risks, such as the erosion of rights for “digitally disadvantaged groups”, data privacy and security crises, unchecked expansion of public power, and the obscuration of accountability. These risks stem from the interplay of conceptual, institutional, and agency-related factors. Conceptually, the conflict between instrumental rationality and value rationality leads to the absence of human-centric values in technology application, neglecting human agency and socio-ethical values. Institutionally, the imbalance between public and private interests challenges data privacy protection and constraints on public authority. At the agency level, the frictions between commercial logic and governance logic exacerbate the negative impacts of technological deployment. To mitigate these risks, systematic optimization of the comprehensive digital transformation of cities is essential. Conceptually, a “human-centric” digital inclusion approach should be established, shifting from a technocratic paradigm to a human-centric paradigm, formulating and implementing a national digital inclusion strategy, and promoting age-friendly services in smart cities. Institutionally, safeguards for private rights and checks on public power must be prioritized, regulating government data collection and curbing the arbitrary expansion of digital authority. Regarding agency, a public-private collaborative governance model should regulate digital platform power, refine accountability mechanisms for public-private collaboration, and foster the sustainable and healthy development of the comprehensive digital transformation of cities.