Canada Loses Ground in the Cloud: Foreign Firms Gain Control

Foreign ownership of Canada's economy has been a contentious issue for decades. By the early 1970s, foreign firms, mostly American, held about a third of all corporate assets in Canada and dominated key sectors such as oil, gas, and mining.

Herb Gray, then a cabinet minister, was among those concerned that Canada was losing control over its own economy. He led a task force examining the costs and benefits of foreign investment, warning that takeovers were 'the form of investment least likely to add significant benefits to the Canadian economy.'

The 1972 task force report, known as the Gray Report, helped spur Ottawa to create a foreign-investment review regime the following year. The basic principle was that foreign companies could no longer assume buying or establishing a major Canadian business was a private transaction.

However, half a century later, the conventional measures suggest that foreign-controlled enterprises now hold just 13.9 percent of Canadian corporate assets. But economist Cecilia Rikap argues that the most powerful firms in the contemporary economy, Amazon, Google, and Microsoft, increasingly exercise control without ownership.

Rikap's case study of Amazon Web Services is particularly revealing: she describes how firms can remain 'independently' owned while AWS sets technical protocols they build around, influences what they specialize in, and captures recurring rents from the resulting ecosystem.

Canada is not immune to this trend. A report from the Canadian Anti-Monopoly Project found that Amazon, Microsoft, and Google hold 85 percent of Canada's public cloud market, against a global average of about 66 percent.