As the Canadian government has earmarked nearly $1 billion toward building a sovereign cloud, a CEO and an academic both think that the opportunity goes beyond giving Canada control over its digital future.
“[Canada has] the research know-how. Now’s the question of starting the economic and commercial engine.”
Though the feds are still working on definitions, a sovereign cloud would use Canadian-owned infrastructure to store data and run applications, theoretically safeguarded from foreign control. Hypertec Group CEO Simon Ahdoot and Simon Fraser University vice-president of research and innovation Dugan O’Neil argue that the Canadian government contracting for such a project could unlock economic gains for domestic artificial intelligence (AI) firms, if done properly.
Ahdoot, whose firm is one of the largest data centre operators in Canada, likened the Canadian AI industry to a lawnmower that will start when the Canadian government pulls the string.
“We have amazing power, so the capacity is there. We have the research know-how. Now’s the question of starting the economic and commercial engine,” he said. The government’s “Buy Canadian” strategy, where it plans to prioritize Canadian suppliers for physical and digital infrastructure projects by next year, will help catalyze that engine and attract private capital, Ahdoot argued.
Ahdoot is set to discuss a Canadian sovereign cloud at the Canadian Science Policy Conference on Wednesday, alongside Simon Fraser University (SFU) president Joy Johnson, Bell AI Fabric COO Jaethan Reichel, SFU’s vice-president of research and innovation Dugan O’Neil, and Photonic’s strategic director of corporate communications Lesley Duncan.
The conference, running from Nov. 19 to 21 in Ottawa, will cover Canadian science and innovation policy with speakers from industry, academia, and the public sector.
While Hypertec is counting on massive economic value created by the AI industry, Ahdoot says Canada should build domestic infrastructure and applications to act as “homeowners” instead of “paying rent” to foreign companies to use their AI services. Part of this push would be acting as an “anchor customer” for local companies.
The government should seek to make the sovereign cloud “as Canadian as possible,” O’Neil told BetaKit. This would give the government more digital control, while giving domestic firms contracts and credibility.
Canadian sovereign cloud primer
As unpredictable US policy spurs concern about data sovereignty, Canadian policymakers and companies are racing to make a Canadian sovereign cloud a reality.
• Carney says new Major Projects Office will help build a “Canadian sovereign cloud”
• Canada hopes to build a sovereign cloud to counter US dominance. It won’t be easy
• Telus opens inaugural Sovereign AI Factory in Rimouski
• Mila partners with Hypertec and 5C to launch Sovereign AI Research Hub in Montréal
• Canadian cloud providers unite to launch sovereign cloud offering for government
Digital sovereignty has become a talking point amidst Canada’s trade war with the United States. As the Canadian government has sought to lessen its dependence on US digital providers, it has created an economic opportunity for domestic companies. However, large-scale data centre buildout also comes with environmental concerns, as power demand is expected to nearly double by 2030.
Under the US CLOUD Act and the Foreign Intelligence Surveillance Act (FISA), there are circumstances where data hosted on servers owned by US companies—even when housed within Canada—could be turned over to US law enforcement by request.
According to a Canadian government white paper on data sovereignty and public cloud, “As long as a CSP that operates in Canada is subject to the laws of a foreign country, Canada will not have full sovereignty over its data.” As for Hypertec, which operates in the US, Ahdoot said this is “not a concern” right now, but that it’s something the company is “monitoring very carefully.”
Founded in 1984 in Saint-Laurent, Que., Hypertec builds and operates data centres that offer cloud infrastructure and services to thousands of customers. It spun off Hypertec Cloud and acquired the American company 5C in April, giving it a larger footprint in the US.
Hypertec has partnered with domestic firms ThinkOn, Aptum, and eStruxture to develop a sovereign cloud offering to sell to the Canadian government. The firms claim the partnership would allow the government and its ecosystem of software providers to run critical workloads under a Canadian-controlled system. Ahdoot said Hypertec has been in touch with AI minister Evan Solomon’s office since the summer.
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However, Solomon did say that he wouldn’t rule out US partners on the sovereign cloud project as the government seeks to define “sovereignty” from legal and operational standpoints.
In the short term, buying US-made hardware such as Nvidia GPUs may be unavoidable, O’Neil conceded, but government contracting would give the Canadian AI industry the chance to compete on hardware in the longer term.
“Everyone goes to buy Nvidia,” O’Neil said. “They’re not the only choice. They’re just a dominant player. And we have to do some work to create markets for other companies to create things that may even be more efficient.”
O’Neil told BetaKit that Canadian researchers and companies will have the opportunity to carve out a niche developing efficient, special-purpose hardware. “I see absolutely no reason why we can’t compete,” he said.
Feature image courtesy Hypertec Group via LinkedIn.