Canada Pursues Digital Sovereignty Amid U.S. Tech Dependency

Canada is actively seeking to reduce its reliance on U.S. technology giants by establishing a sovereign digital economy. This ambition was underscored at the All In conference in Montreal, held at the end of September 2023. The term “sovereign” emerged frequently during discussions, particularly in the context of artificial intelligence (AI) and cloud computing. Evan Solomon, Canada’s Minister of AI, emphasized the importance of creating a digital economy that operates independently and is resilient to external pressures.

The Canadian government has initiated efforts to develop a sovereign cloud, aiming to secure “independent control over advanced computing power.” This initiative comes against a backdrop of growing concerns over data privacy and security, particularly due to the relationship with the United States and its tech companies like Microsoft, Amazon, and Google. Prime Minister Mark Carney has mandated the Major Projects Office to spearhead this initiative, seeking to enhance Canada’s digital capabilities through local infrastructure.

The concept of sovereignty, however, is complex and evolving. As noted by Heidi Tworek, a professor at the University of British Columbia, sovereignty may not be an absolute state but rather a spectrum. “Some people think of it like a light switch. Either you’re a sovereign cloud provider or you’re not,” she stated. “But maybe it’s more of a dimmer.” Sovereignty in this context involves control over data centres, ownership of hardware, and the location of data processing.

At the conference, data centre executives presented their visions for achieving digital sovereignty. Bell Canada showcased its sovereign AI “fabric,” a network of data centres designed to enhance local control. Meanwhile, Telus Corp. revealed its operational sovereign AI “factory,” with executives ceremoniously activating the facility. This emphasis on sovereignty reflects a broader trend in the industry, as companies reposition themselves to align with government objectives.

The pressing need for a sovereign digital infrastructure stems from fears that Canadian data could be subject to U.S. legal demands. The Cloud Act allows American authorities to access data stored abroad, raising alarm among privacy advocates. Brent Arnold, founder of Capstan Legal, expressed concerns about Canadian citizens potentially facing arbitrary decisions by U.S. authorities.

Despite these challenges, U.S. tech companies are also positioning themselves to address sovereignty concerns. Google Canada has introduced measures such as “sovereign encryption keys” that enable customers to retain control over their data. Yet, as Arnold pointed out, these offerings remain largely untested and would be assessed only when real legal requests arise.

The Canadian government is exploring how to define a Canadian cloud provider, particularly in terms of ownership and legal jurisdiction. Notably, companies that have ties to U.S. operations may still fall under the reach of U.S. law, complicating the pursuit of true digital sovereignty.

Canadian companies are also entering the fray. OVHcloud, a French cloud provider, has established data centres in Canada and is eager to contribute to national sovereignty goals. It emphasizes mastering key aspects of the value chain to reduce dependency on foreign vendors.

However, experts warn that achieving complete sovereignty may be impractical. Daniel Araya from the Centre for International Governance Innovation remarked on the challenges Canada faces in balancing economic autonomy with its reliance on American security. He highlighted the bureaucratic hurdles that could impede timely technological advancements.

Even within Canada, the notion of sovereignty is not universally appealing. While some companies in regulated sectors like finance and healthcare are keen on sovereign AI services, others prioritize immediate access to technology, particularly given the global chip shortage.

The pursuit of a sovereign digital economy is both a national priority and a complex challenge. As Canada navigates this landscape, the implications for its relationship with U.S. tech giants and its own domestic industry will be closely monitored. The success of these initiatives will hinge on the government’s ability to balance control, investment, and innovation while ensuring that Canadian data remains protected and accessible.