Sean Speer: Calling for ‘digital sovereignty’ is a weak attempt at a protectionist cash-grab

Open letters to prime ministers are the last refuge of Canadian cultural elites in search of government protections and subsidies. The latest to Prime Minister Mark Carney this week follows this tired tradition. The letter, signed by dozens of organizations and semi-prominent individuals, warns that if his government doesn’t assert Canada’s so-called “digital sovereignty,” we risk becoming the 51st state, with our public square “overrun by foreign influence and made toxic for profit.” In response, they call for an expansive regulatory agenda including the re-adoption of the Digital Services Tax, an expanded Online News Act, new rules for artificial intelligence, data localization, and a host of other government interventions. Their rhetoric is sweeping. We’re told that algorithms are “de facto law,” that cloud providers and social media platforms represent “harmful U.S. infrastructural capture,” and that only an urgent doctrine of “technological non-alignment” can protect Canadian culture and democracy. Strip away the digital jargon, however, and the arguments will sound familiar to anyone who remembers the 1970s. One can practically hear the authors straining not to write “hewers of wood and drawers of water” in their latest case for state-led economic nationalism. The common thread then and now is discomfort with market outcomes and a conviction that governments must override them. Everything else is just rationalization. This is why the letter’s preoccupation with Donald Trump is something of a red herring. Its authors made similar arguments before Trump was elected, and they’d still make them if Kamala Harris or anyone else were in the White House. This isn’t really about the U.S. becoming “belligerent” or “authoritarian.” Their real motivation is far more straightforward. It’s to demand government protections and subsidies for domestic industries. The context may be new and the technologies different, but the thrust is the same: shelter Canada’s economy from competition. The letter also rests on a faulty premise about how American technology companies operate. It treats them as quasi-state-owned enterprises advancing U.S. geopolitical interests, rather than publicly traded firms motivated by profit maximization. That’s simply wrong. Their business model is market share, advertising, and cloud contracts—not Washington’s foreign policy. Many Canadians are themselves investors in these companies through pensions, mutual funds, or ETFs. To imagine that a Canadian-owned platform would somehow operate differently from Meta or Amazon is naïve. Market dynamics don’t respect borders. Equally problematic is the idea that Canada could realistically achieve “digital sovereignty” by walling off its market from U.S. platforms without real costs to our economy and consumers. The services of Google, Meta, Amazon, Apple, and Microsoft are deeply embedded in Canadian commerce, communications, and culture. Cutting them out or forcing localization would mean higher prices, fewer choices, and reduced innovation. Economists estimate that localization rules alone could reduce GDP by up to 1 percent and increase data hosting costs by 30–60 percent. Add in the direct taxpayer costs of enforcing such an agenda, and the tab for “digital sovereignty” would be staggering. The final flaw is the assumption that Ottawa has the state capacity to pull this off. At present, the Canada Revenue Agency struggles to answer the phone during tax season even after expanding its workforce by nearly 50 percent in the past decade. Does anyone seriously believe the federal government can design and run parallel digital infrastructure, regulate artificial intelligence, stand up a new cloud ecosystem, and direct the online news market? The distance between the ambition in this letter and the government’s basic competence is vast. The upshot is that Canadians should be leery of these calls for state intervention dressed up in the language of sovereignty and values. If history is any guide, it won’t be the letter’s signatories who pay the price. It will be ordinary citizens who face higher costs, fewer choices, and lower living standards. The great irony is that Canada has thrived for decades by being open to investment, trade, and ideas from abroad. Our prosperity has been built on integrating into continental and global markets rather than retreating from them. The path to future prosperity in the digital age is no different. Instead of reviving the economic nationalism of the 1970s under digital cover, Ottawa should focus on where it can make a real difference: removing barriers to competition, fostering investment through a competitive tax and regulatory climate, and opening markets so Canadians can seize the opportunities of a technology-driven economy. They may call it digital sovereignty. But it’s really just another open letter with high-minded words masking a familiar push for more protection and subsidies.