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Canada Is Losing the Fight Against Foreign Ownership

We worried about Americans controlling our mines and factories. Now they dominate our digital economy

By the early 1970s, foreign—mostly American—ownership of the Canadian economy had reached levels unmatched among industrialized nations. Foreign-controlled firms held roughly a third of all corporate assets and dominated key sectors such as oil, gas, and mining.

Herb Gray, then a cabinet minister in Pierre Trudeau’s government and later deputy prime minister, was among those worried that Canada was steadily losing control over its own economy. He led a federal 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.”

Its 1972 task force report—officially titled Foreign Direct Investment in Canada, but better known as the Gray Report (which sounds ominous but is also sexier)—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. The government could scrutinize proposed investments and require investors to demonstrate that Canada would be better off—through jobs, domestic production, exports, Canadian management, or other economic gains—before allowing them to proceed.

Half a century later, the conventional measures suggest that Gray’s problem has receded considerably: foreign-controlled enterprises now hold just 13.9 percent of Canadian corporate assets. But we got really good at counting the wrong thing.

Gray would be pissed.

Economist Cecilia Rikap’s The Rulers: Corporate Power in the Age of AI and the Cloud picks up Gray’s fretful baton and carries it into our digital era. She argues that the most powerful firms in the contemporary economy—Amazon, Google, and Microsoft—increasingly exercise control without ownership. Her case study of Amazon Web Services is particularly revealing: she describes how firms can remain “independently” owned while AWS sets the technical protocols they build around, influences what they specialize in, and captures recurring rents from the resulting ecosystem. In Rikap’s telling, dependence on the underlying platform can ultimately limit the very capabilities firms develop to challenge it.

Canada is neither bystander nor outlier to this. 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. So we are materially more dependant than the world at large and in precisely the control layer Rikap identifies. And Ottawa is an eager customer, spending close to $1.3 billion on cloud services from American companies since 2021 (most of it with Microsoft).

If that 1970s grassroots struggle that sparked task forces and new legislative regimes was mostly fought over refineries and mines, today it’s contested in and over the cloud—infrastructure that manages to somehow be everywhere and nowhere at the same time.

Way back when these investment reviews started, we just reviewed nearly all acquisitions. Later, administrative exemptions were introduced for small businesses with under $2 million in gross assets. Later, when the initial Foreign Investment Review Act was replaced by the Investment Canada Act (ICA) in 1985, the initial review threshold for direct acquisitions was set firmly at a cool $5 million. If we’d pegged that threshold to........

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