At the second annual ALL IN conference on artificial intelligence (AI) in Montréal, Canada’s AI minister called digital sovereignty “the most pressing policy and democratic issue of our time.”
“Data is not gold in Fort Knox, where you lock it up. But Canadians need to know the most important definition is that sensitive data is subject to Canadian law.”
Evan Solomon
Minister Evan Solomon has previously said the country is in a “crisis moment” requiring increased support of the tech sector to grow the economy and retain Canadian talent. With the relationship between Canada and the United States (US) fundamentally changed, the federal government is also looking to exert more control over its digital infrastructure, which experts warn is dominated by American tech giants.
Prime Minister Mark Carney announced this month that he plans to build a sovereign cloud through the Major Projects Office. The announcement comes amid larger governmental efforts to fund “sovereign AI” where Canadian companies run data-hosting services rather than rely on US players.
With the government’s announced priorities, tech firms, telecommunications giants, and even US companies are now jumping at the chance to provide “sovereign” services in Canada. But with the entrenchment of American cloud providers and US-owned infrastructure, experts say determining what is “sovereign” is more complex than simply storing data within the country.
Dependence on US providers
The cloud is an online digital infrastructure for applications and data. It powers computations, including AI training and reasoning processes, through servers housed in data centres throughout the world.
US hyperscalers—including Amazon Web Services (AWS), Microsoft Azure, and Google Cloud—provide the majority of the world’s cloud services, including in Canada. They sell cloud services to both the public and private sectors. At the federal level, the shortlist of companies approved to sell cloud services to the government includes seven American companies and just one Canadian company, ThinkOn. On the infrastructure side, American firms own nearly a third of Canada’s 283 data centres.
“It could put you at a meaningful risk if all of your tech and data needs are depending on another country or market.”
Michael Pelosi
Cohere
As part of their offerings for non-US markets, Google, Microsoft, and AWS offer “sovereign” capabilities that promise security and data residency. For example, Google Cloud offers a “data boundary” tailored for Canada that keeps information within the country. It also offers air-gapped solutions for intelligence and defence, keeping data off the internet. Through its accelerator programs, Google offers incentives for up to $350,000 worth of cloud credits for AI-first Canadian startups, as well as support in migrating data over to its cloud.
However, storing data in Canadian data centres doesn’t guarantee data sovereignty, according to experts. Under the US CLOUD Act and the Foreign Intelligence Surveillance Act (FISA), there are circumstances where data hosted on servers owned by US companies could be turned over to US law enforcement by request. The Canadian government called FISA a “primary risk to data sovereignty” in a 2020 white paper.
“Microsoft does not provide any government with direct, unfettered access to customer data,” a Microsoft spokesperson said in a statement to BetaKit. Requests for data are subject to “rigorous review” to ensure they are legally valid and “limited to specific account identifiers.”
A Google Cloud spokesperson told BetaKit in a statement that the company offers “tools and policies that let customers hold their own encryption keys, giving them control over who accesses their data.”
RELATED: Carney says new Major Projects Office will help build a “Canadian sovereign cloud”
Google and Microsoft both say they maintain strict data privacy protections and would fight for customer privacy in the event of a request from law enforcement. However, Microsoft admitted in a French court this year that it could not guarantee that French citizens’ data would be safe from US agencies without explicit authorization from the French government.
Canadians have raised concerns about data security in the wake of the US administration’s often unpredictable trade policy decisions.
Vass Bednar, managing director of the policy think tank Canadian SHIELD Institute, said the ongoing trade war presents a security gap when foreign companies have control over Canadian cloud services.
“A US big tech firm could be bullied to temporarily turn off cloud for businesses and public services,” Bednar told BetaKit. “It would be like the Rogers outage, but way worse.”
Cohere’s country manager for Canada, Michael Pelosi, said at Forum Fintech in Montréal that data location is one of the bigger risks for enterprises deploying AI.
“Although we’re big fans of all the tech players, we do think that with the geopolitical climate, or if there’s any additional instability, it could put you at a meaningful risk if all of your tech and data needs are depending on another country or market,” Pelosi said.
Francois Chadwick, Cohere’s chief financial officer, told BetaKit that data sovereignty is “built into” the company’s product, as it allows clients the flexibility to run the application on their premises and retain cloud services they were already using.
“As companies look forward in using AI, this is just going to become more and more of an issue,” Chadwick said. “People are going to start to say, ‘How good do I feel about who could access my data?’”
“Sovereignty not solitude”
At ALL IN, Solomon stressed that building more Canadian infrastructure would be key to digital sovereignty—by his definition, Canadian control over data that is “free from coercion.”
“Data is not gold in Fort Knox, where you lock it up,” Solomon said. “But Canadians need to know the most important definition is that sensitive data is subject to Canadian law. That’s a core principle that we’re rolling out.”
In response to a question from BetaKit, Solomon said the government is working on three models of data hosting: highly secure (for government use), a publicly available model, and a hybrid model. The type of data considered “key sensitive data” could include personal data about Canadians, such as health and financial information.
As for concerns about privacy infringement from the US through the CLOUD Act, Solomon told reporters that the government is exploring “genuine solutions” with Canadian companies and Canadian hardware.
Canada’s sovereign cloud project follows its Sovereign AI Compute Strategy, a $2-billion project that aims to build domestic data centres and help Canadian companies access computing power to run AI models. At the same time, the federal government said it would forward a new “Buy Canadian” policy to prioritize procurement from Canadian suppliers.
Determining the sovereignty of AI infrastructure is a complex task, according to Niraj Bhargava, co-founder and CEO of Ottawa-based NuEnergy.ai. The AI consultancy has developed a sovereignty assessment framework—a set of criteria for measuring sovereignty across the tech stack and the AI life cycle (from training to running AI models).
“We can’t kid ourselves [that] we’re suddenly going to have a Canadian stack.”
Niraj Bhargava
NuEnergy.ai
The assessment framework also looks to measure the percentage of Canadian ownership of a stack, which might have a different level of importance, depending on the data.
“If we wanted to have a purely sovereign stack, that’s a huge investment,” Bhargava said. “We can’t kid ourselves [that] we’re suddenly going to have a Canadian stack. So how do we make sure we’re intelligent about any dependencies and mitigate any risks?”
The federal government has not yet indicated what a Canadian sovereign cloud initiative might cost, with Bednar noting “the math is complex.” The EuroStack Initiative, run by a group of European tech companies, hopes to deploy a fully capable continental tech stack for €300 billion over the next 10 years. US trade groups have put the cost closer to €5 trillion, larger than the GDP of Europe’s largest economy, Germany.
Through the compute strategy, the federal government has already pledged $240 million to Cohere for compute. The company will be one of the tenants in a Cambridge, Ont. data centre called Ascent TOR1, a former BlackBerry building, according to the Waterloo Region Record. However, there is US involvement in the project. The three American owners—Ascent, Related Digital, and TowerBrook Capital Partners—received a $450-million loan from the Canadian Pension Plan Investment Board, while US-based CoreWeave was tapped to run the facility.
Meanwhile, two of the nation’s largest telecoms have joined forces with tech companies to build networks of “sovereign AI” data centres. Telus teamed up with software firm OpenText, while Bell and Cohere struck their own deal. These partnerships allow telecom companies to rent out space in their data centres to tech companies, who can use them to run AI models.
RELATED: Telus opens inaugural Sovereign AI Factory in Rimouski
According to a Bell AI Fabric spokesperson, this project ensures that “both the infrastructure and data remain under Canadian jurisdiction, free from foreign government oversight.”
Telus also just opened Canada’s “first sovereign AI factory” in Rimouski, Que., which the company claims provides fully Canadian compute and cloud services. Hesham Fahmy, chief information officer at Telus, told BetaKit that its ownership of all parts of the “AI factory,” including fibre connectivity, ensures that the data it hosts is secure from US encroachment.
However, both of the sovereign AI networks are buying hardware from American firms. Telus has partnered with Nvidia to use its AI-friendly processing power, and Bell has partnered with US firm Groq for the hardware in its new data centres in BC.
As the Canadian government assembles a task force to develop an updated AI strategy, data infrastructure is top of mind for domestic companies. French company OVHCloud, a non-US cloud provider, said it is “actively engaging” with the government on the sovereign cloud project. Cohere’s Chadwick said he believes more Canadian companies could step up to provide these services.
“There’s a number of us going together to talk with the government in Canada to fix some of these issues,” Chadwick said.
Feature image courtesy ALL IN.