Imagine: just before heading into renegotiations of the Canada-US-Mexico Agreement (CUSMA), President Donald Trump shoots Microsoft a request. Could you grab Prime Minister Mark Carney’s briefing notes from his team’s Outlook, or Office, and share them with the White House?
“We could have compelling governance strategies for the data-driven digital economy, and we’ve just chosen not to, for whatever reason.”
That hypothetical is one of the possibilities that Canadian Shield Institute managing director Vass Bednar and her colleagues want Canadians to think about as the country heads into trade talks this summer with its southern neighbour. Last week, the Toronto policy think tank published the first chapter in its eight-part Foundations of Digital Sovereignty series, which proposes a blueprint that would allow Canada to build full ownership over its citizens’ online lives.
Amid the recent talk about digital sovereignty, BetaKit took the opportunity to sit down with Bednar to unpack what the term actually means, where we sit today compared to our global peers, and what the consequences might look like if Canada does not take the right steps to ensure we own and control our digital economy.
The following interview has been edited for length and clarity.
Why did the Canadian Shield Institute launch this Foundations of Digital Sovereignty project?
Digital sovereignty seems like a fancy, esoteric, and abstract phrase, maybe a nice-to-have. But the digital economy is increasingly how value is created and captured.
We understand that we’re in an attention economy, and we wanted to invite more readers and thinkers to feel like they could wrap their minds around digital sovereignty.
It is aimed towards a wonkier audience; any think tank is trying to influence policy decision makers, but we are also mindful of people who are one or two degrees away from them.
Does Canada have a working definition of what digital sovereignty means? Or is that definition something you’re hoping to help address?
We want to help.
There was an update federally on March 31. But the original federal document on digital sovereignty brushed aside a lot of risks: that the US can access our data or compel companies to give data to the government. That the mere possibility of that has persisted is hugely problematic.
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The other element is the same hyperscalers that already dominate these marketplaces want to be a part of building our sovereignty. If we’re licensing away compute space to American-owned hyperscalers, is that a sovereign solution?
Why is digital sovereignty so important in this moment?
We’re much more awake to the interdependencies and vulnerabilities we have with the US as a function of both their platform dominance and weak provisions in CUSMA. Those vulnerabilities always existed, but the Trump administration is much more willing to exploit them. And we also see this alignment or fusion between the US government and Big Tech.
We could have compelling governance strategies for the data-driven digital economy, and we’ve just chosen not to, for whatever reason. We can’t keep doing that.
Chapter One of your Foundations of Digital Sovereignty series is out now. What are the biggest takeaways for BetaKit’s audience?
Sovereignty is kind of tricky-to-spell, fun-to-say, dangerously vague, kind of hot right now, but meaningless on its own. In practice, sovereignty is just whether or not you can govern the economy you have.
“Because of poor provisions in the digital chapter of CUSMA, we are governing with one hand behind our back.”
Other jurisdictions are ahead of Canada in terms of appreciating that governing the digital economy—so, intangible assets, both data and IP—in smart ways creates competitive advantages.
Because of poor provisions in the digital chapter of CUSMA, we are governing with one hand behind our back. We gave away a lot of rights and abilities, and that sucks. And it looks like there’s likely to only be more slippage in that regard, but that’s not inevitable.
We have all these things and we’re not using them to our full capacity. When you don’t use the resources and the policy levers that you have, it’s kind of a sovereignty fail.
We’re really overfocusing on residency—where data is held. It’s part of the story, for sure. But who has built and governed these systems, what the rules are, as well as those vulnerabilities in the US CLOUD and FISA Act are also important.
What can we expect from the coming chapters?
We’re releasing it in a snack-sized, chapter-by-chapter way. It’s giving Goosebumps. It’s giving Choose Your Own Adventure. Come back next week, learn a little bit more. You can join in, you can catch up, you’re not behind.
A lot of the time, we’re focusing on these downstream effects of a poorly governed platform economy, when, if we were thinking more structurally, or earlier and upstream, we could have stronger and better outcomes.
Canada is investing heavily in building sovereign computing infrastructure. What will the impact of those investments be without the right governance underpinning them?
They’ll be minimized. We are investing more in data centres and sovereign compute, but again, in service of who and what? If it is going to serve extractive foreign platforms that are spying on us and influencing us and extracting value from us, then we’re just using public dollars to invest in what they would otherwise build for themselves.
What do you make of Canada initially leaving tech off of its US economic relations advisory committee before swiftly changing course and adding Dominion Dynamics founder and CEO Eliot Pence?
I was disappointed when I first saw that group, for a range of reasons. The Canadian Chamber of Commerce and the Business Council of Canada have significant US Big Tech recognition. That bothers me—I think there’s an inherent conflict.
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I was happy to see an entrepreneur and innovator added. There’s a lot riding on poor Eliot’s shoulders for him to represent the whole sector, but he’s also a kind person who’s a listener and who’s super committed to sovereignty and getting things right for Canada.
We’re sort of just saying, ‘one person, we did it, that’s covered,’ when Big Tech has multiple representatives in that group.
How important is it that Canada has folks who understand digital trade and IP advising the feds heading into CUSMA negotiations?
It’s imperative. It’s not 1994 anymore, and I worry sometimes that a lot of high-level decision makers studied from the same economics textbook, and they’re unwilling to acknowledge how the economy has changed and how value creation has changed.
The US is much more alive to this. They are a few steps ahead of us, and we need to be ready.
During previous trade negotiations, I feel like maybe Canada was, from a legal perspective, still stuck in a techno-optimist moment. We agreed we basically wouldn’t try to regulate platforms. As a result, a lot of our digital policy has been this very Canadian approach of just asking large companies very nicely to comply.
You’re saying we let the US take the lead on regulation.
Exactly. We may not have fully realized at the time what we’re giving away, but it’s really hurt us since then. Digital sovereignty needs a seat at the table.
What’s at stake if we don’t achieve true digital sovereignty?
Think about the amount of time you spend on your phone or on a screen per day, and then look at the amount of time, legislative space, and space on that trade group we’re giving to the digital economy. It’s a total mismatch.
We have been, for a very long time, slow or reluctant to intervene or insert ourselves in the value chain of the digital economy… Whatever we’re going through with the Trump administration, it’s a very productive forcing function we should be taking full advantage of.
“A lot of our digital policy has been this very Canadian approach of just asking large companies very nicely to comply.”
Do you want a cloud provider to throttle access to all of your company’s infrastructure, IP, and information because they want to punish Canada during these trade talks? Do you want this trade war to devalue your company so that it’s easier for an American firm to acquire it and snap it up at a cheap price? Those are the vulnerabilities Canada needs to be caring about.
The infrastructure of tomorrow is not just roads and bridges and airports—the infrastructure of tomorrow is sovereign cloud and sovereign compute capability. We’re not going to achieve digital sovereignty overnight, but we need to be putting forward a vision of what kind of digital economy we actually want. We can govern it ourselves, in our interests, or we can remain subordinate to the US as a 51st digital state. And you can guess which side I’d want to be on.
Feature image courtesy the Canadian Shield Institute.