A recent study labels Canada’s cloud computing market as “flawed” and cautions that relying solely on Canadian alternatives to major U.S. tech companies could lead to Canadians being stuck in “maplewashed dependencies” unless providers are mandated to ensure compatibility.
According to the latest report from the Canadian Anti-Monopoly Project, cloud computing is considered essential infrastructure, and there is already a lack of competition in Canada, with American tech giants Amazon, Google’s parent company Alphabet, and Microsoft controlling approximately 85% of the Canadian market.
Cloud computing involves leasing software, processing capabilities, and storage from a provider and accessing the services via the internet. This technology supports various functions, from government operations and financial transactions to streaming services and social media platforms.
Economics professor Joel Blit from the University of Waterloo and the Centre for International Governance Innovation expressed concern about the significant concentration of the Canadian cloud computing sector in the hands of just three companies, highlighting potential market power issues.
Policy analyst Curtis McCord, a co-author of the report, emphasized that simply adding Canadian providers would not solve the problem if customers faced high costs when switching between services. McCord stressed the importance of rules mandating compatibility among providers to prevent customers from being locked into a single service.
The report calls for the establishment of international standards to ensure interoperability among cloud companies, aiming to enhance competition and decrease reliance on a few dominant U.S. firms. Both Google and Amazon have eliminated transfer fees to facilitate customer migration away from their platforms, in response to pressure from European regulators concerned about switching barriers.
Microsoft Canada emphasized its commitment to digital sovereignty, emphasizing customer choice, interoperability, and data portability. The report also mentions Canada’s draft national AI strategy, which emphasizes the need for shared standards and significant investments to reduce dependence on foreign cloud technology providers.
While the federal Competition Bureau clarified that being a dominant business is not inherently problematic, it acknowledged concerns raised during a public consultation about incumbent companies creating hurdles for smaller firms. The Canadian Anti-Monopoly Project discourages the creation of new standards by “middle powers” and advocates for leveraging widely adopted existing technologies.
The report underscores the importance of compatibility in boosting competition but warns that premature standardization could restrict innovation and product differentiation in the cloud computing sector.
