A recent study has labeled the cloud computing market in Canada as “broken,” cautioning that reliance on domestic alternatives to major U.S. tech firms could still result in Canadians being tied to “maplewashed dependencies” unless providers are mandated to ensure compatibility.
The most recent report from the Canadian Anti-Monopoly Project characterizes cloud computing as essential infrastructure and highlights the lack of competition in Canada, with major U.S. tech players like Amazon, Google’s parent company Alphabet, and Microsoft controlling approximately 85% of the Canadian market, according to estimates.
Cloud computing involves leasing software, processing capabilities, and storage from a service provider and accessing the results over the internet. It serves as the backbone for various services, including government operations, financial transactions, video streaming, and social networking.
The high concentration of Canadian cloud computing within just three companies raises concerns, noted 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 market power that could be wielded by companies in highly concentrated industries.
Curtis McCord, a policy analyst with the Canadian Anti-Monopoly Project and co-author of the report, highlighted the challenges of switching providers due to the substantial costs involved for clients. McCord stressed that merely introducing Canadian “sovereign” providers would not solve the issue if customers face hurdles when transitioning between services.
The report emphasized the necessity of regulations that encourage or mandate compatibility among service providers to prevent customers from being locked into a single provider. It warned that even domestic alternatives could perpetuate “maplewashed dependency” if users remain tied to incompatible systems.
Google Cloud and other major providers have introduced measures to facilitate data transfers and portability following pressure from European regulators concerned about switching barriers. McCord, however, cautioned that data export capabilities do not automatically ensure seamless integration with other providers’ systems.
The report called for Canada to advocate for international standards that promote compatibility among cloud companies, aiming to foster competition and reduce reliance on a small number of U.S. firms. The potential impact of cloud computing concentration on access to artificial intelligence was also highlighted by Blit, underscoring the need for compatibility to enhance competition while avoiding restrictions on product innovation.
The draft version of Canada’s national AI strategy mentioned collaborative efforts on shared standards with partners and emphasized the importance of investment to reduce Canada’s dependence on foreign technology companies for cloud computing. The Canadian Anti-Monopoly Project’s research paper discouraged the development of new standards by Canada and other “middle powers,” recommending reliance on widely adopted existing technologies.
As AI applications become more prevalent, McCord stressed the critical role of cloud computing as infrastructure, while Blit warned that concentrated control of cloud services could influence AI access in the country. The potential benefits and drawbacks of implementing compatibility standards early were also highlighted to balance competition and innovation in the industry.