A recent study highlights concerns about the cloud computing market in Canada, labeling it as “broken” and suggesting that reliance on domestic alternatives to major U.S. tech companies could still result in Canadians being tied to “maplewashed dependencies” unless providers are mandated to ensure compatibility.
According to the Canadian Anti-Monopoly Project, there is a lack of competition in Canada’s cloud computing sector, with three U.S. tech giants – Amazon, Google (parent company Alphabet), and Microsoft – controlling around 85% of the market. Cloud computing involves the rental of software, processing capabilities, and storage from a provider, with access to services delivered via the internet and supporting various functions from government operations to online transactions and media consumption.
Joel Blit, an economics professor at the University of Waterloo and a senior fellow at the Centre for International Governance Innovation, expressed concerns over the significant market share held by just a few companies, emphasizing the potential for market power abuse in highly concentrated industries.
The report’s co-author, Curtis McCord, a policy analyst with the Canadian Anti-Monopoly Project, stressed the need for increased competition in Canada’s cloud computing space. McCord highlighted that simply introducing Canadian alternatives would not solve the issue if customers face high costs when switching providers due to compatibility issues.
The report calls for regulations that encourage or mandate compatibility among providers to prevent customers from being locked into specific services. It warns that even domestic alternatives could lead to “maplewashed dependency” if users remain tied to incompatible systems.
Major cloud providers like Google and Microsoft have made efforts to facilitate data transfers and promote interoperability, responding to pressure from regulators in Europe and the U.K. However, McCord cautioned that data portability does not guarantee seamless integration with other provider systems.
The report advocates for the adoption of international standards to promote compatibility among cloud companies, aiming to enhance competition and reduce reliance on a few dominant U.S. firms. Discussions on shared standards and reducing dependency on foreign technology companies are also mentioned in Canada’s draft national AI strategy, emphasizing the importance of fostering a competitive cloud computing market.
While the federal Competition Bureau clarified that market dominance alone is not a concern under current regulations, there are ongoing discussions about potential barriers to competition in the cloud computing industry, with calls for increased investment to bolster Canada’s digital sovereignty and reduce dependence on foreign technology providers.