19-07-2025
Digital sovereignty is a means to an uncertain goal
Jamie Duncan is a PhD candidate at the Centre for Criminology and Sociolegal Studies at the University of Toronto and a Digital Policy Hub doctoral fellow at the Centre for International Governance Innovation.
Wendy H. Wong is a professor of political science, the Principal's Research Chair at the University of British Columbia, and the author of We, the Data: Human Rights in the Digital Age, which won the 2024 Balsillie Prize for Public Policy.
Canadians have been a bit touchy about sovereignty lately, and for good reason. The 'elbows up' attitude that swept the country in response to U.S. President Donald Trump's aggressive antics has inspired a newfound enthusiasm for Canadian nation-building.
One of the more aspirational aspects of Prime Minister Mark Carney's vision for our country is the idea that we can achieve digital sovereignty while enhancing our effectiveness in other sectors, like energy and Arctic security. Canada has its first Minister of AI and Digital Innovation, who has a broad mandate to bring AI innovation home and promote Canada's digital sovereignty.
But even if such a thing were possible, there is no clear vision of what we'd do with it.
'Digital sovereignty' has become a catchphrase in global politics. Essentially, the idea is that countries want more control over the many parts of the digital economy that affect them, including hardware, software and data. Lately, this has meant focusing on AI.
Sovereignty typically means having control over a specific place. It's the ability to make and enforce rules (for the most part) without interference. In the physical world, it's easy to picture a country expanding control. For example, building a military base in the Arctic helps Canada protect the area and enforce laws. But sovereignty isn't just about defence; it also applies to daily life. Energy or food sovereignty means producing more of what we need at home, so others can't raise prices or cut off supply.
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But digital spaces are fundamentally different from Arctic territory or oil fields. Digital sovereignty means being able to control Canada's digital destiny – which is easier said than done.
From access to endless educational resources to bingeable TV in every language, the internet has its perks. But to make our digital choices truly 'ours,' we must acknowledge how our connected world affects our national sovereignty. Nearly every part of our online lives is somehow enabled by foreign companies. Data from more than 30 million Canadian social media users pour through our physical borders and into the hands of multinational companies. Consider Facebook, Instagram, WhatsApp and Messenger, all owned by U.S. company Meta. And from the military to the local corner store, almost every part of the Canadian government and economy relies on digital infrastructure and software provided by American tech companies.
Nor is there much respect for Canada's physical border among cybercriminals. Ransomware or a cryptocurrency pump-and-dump scheme can affect anyone from Squamish, B.C., to Ingonish, N.S. – but the perpetrators could be almost anywhere in the world.
Digital technologies comprise some combination of infrastructure (servers, cables and the grid), services (or apps) and data streams. Canada's digital sovereignty aspirations around AI hinge on our ability to set and enforce rules about the three major components of those systems: data, code and compute.
Data – the lifeblood of the digital economy – are what make fancy large language models and the TikTok algorithm work so well. Data are also responsible for many of their biases and blind spots.
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Computer code instructs these tools to turn data into something useful or profitable. Code is the secret sauce that transforms an (often patented) idea into cash.
And none of this could happen without computing power, or compute. While you can store data and write code on your laptop, most commercial services run in the cloud. And while that may sound dreamy and far away, the cloud is just a bunch of data centres: big buildings filled to the brim with computers designed to process and store enormous quantities of data.
Digital sovereignty requires considering several trade-offs simultaneously. Building data centres gives us more capacity to process and store the massive volume of data being harvested daily, but this compute and this data don't do much without equally powerful algorithmic tools. And all the data, while potentially insightful, are of dubious value if we do not have a coherent rationale that justifies and regulates the collection, storage and use of data taken from mostly unaware people.
Canada's digital policy efforts over the past decade have mostly failed to strike an effective balance. The pan-Canadian AI strategy has helped some of the world's top AI researchers advance their fields and train the next generation of innovators, but research breakthroughs are just a start. Canadian policy-makers and companies have been far less adept at keeping this taxpayer-subsidized intellectual property and talent at home.
Much-needed updates to Canada's outdated privacy law were stuck in Parliament for more than two years, and in the end, they never passed. As a result, Canadians' sensitive data remain poorly protected, with few ways to enforce privacy rights. Worse still, the government gave up its ability to control cross-border data flows when it signed the United States-Mexico-Canada Agreement.
Canada has also failed to recapture some of the spoils of the digital economy. The Online News Act's imposition of compensation requirements on companies linking to Canadian content online backfired. Rather than boosting the revenue of Canadian media outlets, the law undermined Canada's informational sovereignty when Meta decided to simply stop linking social media users in Canada to news outlets. More recently, the Carney government withdrew Canada's planned Digital Service Tax on digital service providers, after Mr. Trump threatened to terminate trade negotiations over its 'unfairness' to American companies.
In its early days, the Carney government took a seemingly different tack. The Liberal election platform promised to use tax incentives to keep more intellectual property in Canada and promote homegrown innovation. The government is also supporting a Canadian Sovereign AI Compute Strategy to build data centres and subsidize Canadian companies' access to high-performance computing.
A new approach is welcome, but there are drawbacks. Ideas that focus on building data centres – like Kevin O'Leary's proposed Wonder Valley in Alberta – can have environmental impacts. Tech giants such as Google, Microsoft and Amazon have all reported major increases in emissions owing to the fact that these facilities use huge amounts of energy and water, generate heat and noise, and often affect nearby communities. These largely automated centres would also likely fail to create many new jobs.
Tax breaks that keep patents in Canada and support local business growth could help strengthen our digital economy. But it's important to understand that Silicon Valley owes much of its success to operating in a loose regulatory environment. There are Canadian alternatives in the works, but they might not offer real value if global reach – something our platforms may not easily achieve – is what makes social media so popular in the first place.
Many companies have been allowed to profit from largely unregulated collection and analysis of data about people. The side effects are serious and well-known. They include rising mental health problems in teens and growing political divisions. Both are made worse by algorithms that aim to keep people hooked instead of helping them understand the world.
Digital sovereignty is only useful if it is accompanied by a sensible digital policy agenda designed to address the many harms associated with data-driven technologies. As we have written before, data is harvested individually but has collective impacts.
As long as our government ignores the contradiction between building AI with personal data and protecting basic democratic rights – like consent, equality, autonomy, privacy and dignity – there will be a disconnect between the promise of an AI-powered economy and the real social and political problems digital technology can create.
Efforts to achieve digital sovereignty represent an important shift in policy. Leaders are starting to realize how much control over Canadians' online lives – and the wealth created by digital technologies funded with public money – has been handed over to foreign governments and Big Tech. But while it's a worthy goal, it will only happen if Canada has a clear plan for building a digital economy that works for all Canadians. That means carefully weighing both the benefits and the costs of relying on data-driven technologies.
