A recent study labels the Canadian cloud computing market as “flawed” and cautions that local alternatives to major U.S. tech firms could still result in Canadians being stuck in “maplewashed dependencies” unless providers are mandated to be interoperable. The most recent report by the Canadian Anti-Monopoly Project characterizes cloud computing as fundamental infrastructure and highlights a lack of competition in Canada, with major U.S. tech players like Amazon, Google’s parent company Alphabet, and Microsoft dominating around 85% of the Canadian market, as estimated by one source.
Cloud computing involves leasing software, processing capabilities, and storage from a provider and accessing these services over the internet. It serves as the backbone for various services, including government operations, banking transactions, video streaming, and social networking. The concentration of a significant portion of Canada’s cloud computing sector within just three corporations raises concerns, according to Joel Blit, an economics professor at the University of Waterloo and a senior fellow at the Centre for International Governance Innovation.
Blit emphasized the potential risks associated with high industry concentration, stating that companies with substantial market share may exert undue influence. Curtis McCord, a policy analyst at the Canadian Anti-Monopoly Project and co-author of the report, noted that merely introducing Canadian “sovereign” providers would not address the issue if customers encounter difficulties switching between providers due to high transition costs. He emphasized the necessity of regulations mandating compatibility among providers to prevent customers from being locked into a single service.
The report advocates for the implementation of international standards in Canada to promote compatibility among cloud companies, which could foster competition and reduce reliance on a few U.S. entities. Both Google and Microsoft have made efforts to facilitate data transfers for customers leaving their cloud services, following pressure from European and U.K. regulators concerned about barriers to switching providers. However, McCord cautioned that data export capabilities do not guarantee seamless integration with other providers’ systems.
The research paper from the Canadian Anti-Monopoly Project discourages Canada and other “middle powers” from creating new standards, suggesting reliance on widely adopted existing technologies instead. McCord described cloud computing as crucial infrastructure, particularly with the increasing use of AI. Blit highlighted the impact of concentrated control in cloud computing on AI access, emphasizing the importance of compatibility for fostering competition while acknowledging the potential limitation on innovation if standards are imposed prematurely.