A recent publication characterizes the Canadian cloud computing market as “broken” and raises concerns that national alternatives to major U.S. technology companies could still result in Canadians being stuck in “maplewashed dependencies” unless providers are mandated to be interoperable.
According to the most recent report by the Canadian Anti-Monopoly Project, cloud computing is considered fundamental infrastructure, and Canada already experiences a lack of competition, with major U.S. players like Amazon, Google’s parent company Alphabet, and Microsoft dominating approximately 85% of the Canadian market.
Cloud computing entails leasing software, processing capabilities, and storage from a provider and accessing the results via the internet. This technology underpins various services such as government operations, banking activities, video streaming, and social media.
The concentration of a significant portion of Canadian cloud computing in the hands of just three companies is troubling, emphasized Joel Blit, an economics professor at the University of Waterloo and a senior fellow at the Centre for International Governance Innovation. Blit, whose research focuses on innovation and innovation policy, highlighted the potential market power that highly concentrated industries can wield.
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 solve the problem if consumers encounter high costs when switching between providers. McCord stressed that without regulations mandating or encouraging compatibility, customers risk being locked into their current provider, perpetuating the issue.
The report advocates for the adoption of international standards that would promote compatibility among cloud companies, potentially fostering competition and reducing dependence on a few U.S. firms. The necessity for clear rules to facilitate easy provider switching is emphasized to avoid “maplewashed dependency” with incompatible domestic alternatives.
While Google has eliminated transfer fees and actively opposes restrictive cloud licensing policies, Microsoft Canada underscores its commitment to digital sovereignty through choice, control, and compliance with local regulations. Both Google and Amazon offer free data transfers in specific scenarios, following regulatory pressure in Europe and the U.K., which raised concerns about barriers to switching cloud providers.
The report further suggests that being able to export data does not ensure seamless integration with another provider’s system. It calls for caution in developing new standards, encouraging reliance on widely adopted existing technologies to prevent unnecessary complications.
The draft version of Canada’s national AI strategy mentions the need for shared standards with partners and substantial investments to reduce reliance on foreign tech companies for cloud computing. The federal Competition Bureau clarified that being a dominant business is not inherently problematic, but public feedback has raised concerns about incumbent companies hindering smaller firms.
The research paper from the Canadian Anti-Monopoly Project warns against “middle powers” like Canada creating new standards and advises leveraging established technologies to maintain interoperability. With the increasing use of AI, cloud computing is deemed essential infrastructure, with concentrated control potentially influencing AI access.
Enhancing compatibility could foster competition, although premature standardization might limit companies’ ability to innovate and offer unique products, akin to the VHS versus Beta scenario.