Technological Sovereignty: A Canadian Perspective on Decoupling from U.S. Tech Giants

Posted on: 2025-02-28

For the past month, it's fair to say Canadian news has been talking about tariffs on a daily basis. While the ones proposed by United States President Trump are only aimed at goods for now, there's already been some rhetoric about pushing punitive tactics against Canada even further. Services like cloud hosting, SaaS providers, document processing, email, hardware, software and more can easily find themselves impacted in the not too distant future. Even without tariffs, over-reliance on a single country, particularly in the critical technological sector, is never a good thing. Canada has long enjoyed a close relationship with the U.S., but as a result of this close relation, our tech sector is incredibly closely tied with U.S. tech giants. Our current figures show that 76% of our exports go to the U.S., with 62% of imports. Our biggest import is that of commercial services, including tech.

Governments and companies around the world have a long history of leveraging dependencies. We can recall how Europe's reliance on Russian oil impacted how sanctions were applied back in 2022. The U.S. government has also forced its foreign policy agenda on other countries by using their dependence on American weapons. And of course we can recall how Microsoft pushed Netscape out of the browser business back in the 1990s thanks to its monopoly on operating systems. This same company still uses the same tactics to this day: don't wonder why Edge keeps popping up or being suggested to you on Windows 11, even if you repeatedly told it you aren't interested.

But how does Canada compare with other similar countries? While a lot of countries find themselves tied to the U.S., Canada's situation is compounded by its geographical proximity on the American continent. We're heavily dependent on their technology exports including software, hardware and cloud infrastructure. We also spend a lot of time using U.S. social networks, our data reside on U.S. storage, our emails go through U.S. servers, and so on. This includes services from companies like Apple, Microsoft, Meta, Amazon and more.

If we take countries like Poland and Spain, countries with similar populations, we can see the two of them face similar dilemmas regarding our reliance on U.S. tech:

Like Canada, Poland has significant ties to U.S. tech companies in the IT outsourcing space and is heavily reliant on U.S. defense contracts for military technology. However, Poland's historical dependence on Russia for energy has made the country more attuned to the risks of external dependency. In recent years, Poland has worked to diversify its supply chains and has made significant investments in European technological partnerships. For example, Poland is working with the EU to include dual-use technologies in the EU's next seven year research and innovation funding programme, due to start in 2028, saying the tense geopolitical situation makes it vital.

Spain, on the other hand, has historically been less dependent on U.S. tech companies compared to Canada. While some U.S. tech giants play a singificant role in Spain's tech infrastructure, the country has strong ties with the EU which provided alternative partnerships. For example, Spain invests with OVHCloud, a major European cloud provided, who recently expanded its presence in the country.

There are a lot of reasons behind our dependence on U.S. technology. The biggest one is the economics of scale. America has a large domestic market of over 330 million people, allowing tech companies to achieve profitability and scale before expanding internationally. They're also able to invest billion of dollars, a level of investment impossible to match by smaller countries and companies. They also use their ecosystems to expand internationally and in other sectors, like Amazon pushing local retailers out of business. There's also something to be said about the American entrepreneurship spirit. Canada invests 1.7% of its GDP in R&D, compared with 3.1% for the U.S. That's around $37 billion versus $834 billion annually.

Decoupling from U.S. technologies won't come easily, quickly or without economic hardships. We lack tech giants like Amazon and Microsoft. While Canada has a significant number of tech companies, they are much smaller in scale. But despite the challenges, many think it's a necessary step to take. While complete independence is unrealistic at this point, there are many actions that can be taken by individuals and companies that can help on the pathway towards more autonomy:

• Diversify trading partners: Already the Canadian government has been working to improve trading relations with other countries like Germany.
• Support local tech: There are many local options that can be used by both individuals and organizations for everything from hardware, software, email hosting and more.
• Self-hosting and open-source solutions: We're already seeing companies pulling away from the cloud, citing high costs, complexity and vendor lock-in as reasons why self-hosting their data may be preferable. Using open-source solutions also means no company controls your access to it.

The goal of decoupling should not be isolation but resilience. The capacity to withstand external pressures while maintaining essential functions. By diversifying our technological relationships, investing in domestic capacity, embracing open standards, and building international partnerships beyond the U.S., we can preserve the benefits of integration while reducing its risks. The path will be challenging, but Canada can gradually reduce its reliance on U.S. tech giants while strengthening its own technological sovereignty. Organizations and individuals should also play a role in the services we use, software we buy and companies we invest in.