Canada and EU to discuss tech alliance at Montreal summit

MONTREAL · Canada and the European Union will meet in Montreal later this month to discuss forming a technology alliance aimed at reducing dependence on U.S. tech giants. The Canada-EU Summit on Oct. 29 and 30 will address cooperation on artificial intelligence, quantum computing and cybersecurity. The talks come amid concerns over economic coercion and the strategic risks of relying on American firms for critical digital infrastructure. European Commission President Ursula von der Leyen has promised the two sides "will create a tech alliance."

Former Canadian chief trade negotiator Steve Verheul has advised Ottawa to "bring friends" when dealing with digital policy issues that anger Washington. The need for allies is showed by Canada's recent experience with its Digital Services Tax. The tax targeted U.S. tech giants, prompting fury from former U.S. president Donald Trump, who called it a "direct and blatant attack on our Country" and threatened trade discussions. Canada later rescinded the tax without gaining anything in return. Similar pressures have affected the EU, which has watered down enforcement of digital platform laws. Keldon Bester of the Canadian Anti-Monopoly Project and Giorgos Verdi of the Open Markets Institute Europe argue that without a united front, efforts to regulate technology will remain at the mercy of American companies. "We can collaborate all we want, but if that only occurs within the good graces of the world’s largest technology companies, then we are setting ourselves up for misery," they wrote.

The dominance of U.S. firms is a shared concern. American companies control 85 per cent of Canada's public cloud market. In Europe, an estimated 80 per cent of total spending on cloud software and services goes to U.S. companies. Former European Central Bank president Mario Draghi noted in a recent report that American control of Europe's cloud markets represents a strategic risk. Governments are major customers, with Microsoft accounting for 66 per cent of tracked Canadian federal cloud-services spending from 2019 to 2023.

The proposed tech alliance can be seen as a response to Prime Minister Mark Carney's call at the World Economic Forum for middle powers to work together. In a September speech to the European Parliament, Carney mentioned potential collaboration on AI safety and computing capacity. He also referenced the ability of digital platforms to steer regulatory efforts, an area the authors say holds great potential for Canada-EU cooperation. Bester and Verdi propose three areas for the alliance to begin unwinding American tech dominance. First, they recommend joint enforcement of competition laws to disrupt anti-competitive locks on key markets. Second, they call for coordination on developing alternatives to American and Chinese technology in critical sectors through industrial policy and procurement. Recognizing Canada under the EU's cloud sovereignty framework would be a first step, allowing Canadian cloud companies to seek sensitive EU government contracts. Finally, the alliance should leverage its combined buying power as major importers of digital services to defend its interests. The goal is to present a united front against coercion and begin defusing a persistent dependency. The summit agenda must compete with other topics like the war in Ukraine, but the authors argue reducing technology dependence should be a central goal of the Canada-EU alliance.

With files from The Globe and Mail