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Canada’s AI Competition Report Faces Big Tech Challenges
AI | Jan 27, 2025
Image courtesy of Freepik AI
Canada’s AI and Competition Report Shows Big Tech, Big Challenges, and Big Questions
On January 27, 2025 the Competition Bureau of Canada published the results of its consultation on artificial intelligence (AI) and competition on March 20 based on inputs from 28 stakeholders from global tech firms to startups, academics and consumer advocacy groups, outlining key issues and opportunities of AI in Canada. The findings highlight a pressing need for Canada to balance innovation with fair competition.
Key Feedback from the Consultation
Stakeholders agree that AI is a game-changer in business, forging innovation in sectors like finance, healthcare, and transportation, and opening up endless possibilities but it also brings real challenges that Canada needs to address head on. AI relies on access to high quality data, compute power and specialized expertise making it challenging for smaller businesses to enter the space or compete.
Big Tech Dominance
Perhaps the biggest concern is the dominance of AI by a handful of large big tech companies like Google, Amazon and Microsoft who control most of the AI infrastructure like data centers, supercomputers and AI chips. This concentration of power isn't new to Canada who is fine with a handful of large banks controlling the majority of the country's financial assets. While Canada has many AI players such as Cohere (Canadian government invested $240 million), Element AI (sold to ServiceNow in U.S.), Waabi, Peak Power, Tenstorrent, Deep Genomics (see CVCA post on growth of Canadian AI by investment mapped), and is recognized for its strong AI research leaders, they do not necessarily operate at the same scale as the likes of big U.S. or Chinese tech companies like OpenAI or Google. As with all forms of high concentration of power, it creates significant barriers for innovative startups and smaller firms to access the resources to train and deploy competitive AI models, however this could change with DeepSeek's disruption. Will Canadian AI firms be able to compete effectively globally, if they are dwarfed in size by their competitor's resources.
See: CMA Flags Big Tech’s Tightening Hold on AI Markets
Large players could also control the AI supply chain by not allowing smaller competitors to access the infrastructure and tech needed to develop AI systems. Exclusive partnership agreements could also adversely impact competition. Could large players shut off access to critical AI inputs in a type of tariff trade war?
Last December 2024, the Canadian government announced the Canadian Sovereign AI Compute Strategy, a $2 billion investment over 5 years aimed at reducing the reliance on foreign tech giants and strengthen Canada's AI infrastructure but will it be enough when the U.S. has launched a $500 billion Stargate AI infrastructure project?
Other AI Risks Flagged
AI tools such as algorithmic pricing can unintentionally lead to anti competitive practices, when for example, a system automatically adjusts prices to align with competitors - price collusion that's hard to detect and regulate.
The report talks about accountability when AI systems become more autonomous and complex, who is responsible for the outcome of their decisions. While not a new point, the risk is a legal and ethical challenge where AI generates biased or harmful decisions. Think for example a loan approval of auto hiring process.
See: How AI Is Evolving Finance, Security, and Global Economies
Another major concern of course is the distribution of misinformation and rise of fake AI generated content like deepfakes, fake reviews etc that mislead consumers, damage trust, and give unscrupulous businesses an unfair/unethical business advantage.
Overview of Recommendations
The recommendations in the report are quite high level and scattered throughout the report but here they are in a simple format.
- Legislation should be tech neutral
- Conduct comprehensive market studies to better understand how AI will impact competition (i.e. AI's impact on payments, global regulatory standards)
- Promote fair competition and reduce barriers (ensure equitable access to data for startups and SMEs, invest in compute resources to reduce reliance on foreign tech, foster partnerships between large and small players to prevent incumbents from dominating, support SMEs with incentives like grants and tax credits)
- Ensure transparency and consumer protection (may need to strengthen existing laws)
See: OpenAI’s U.S. Economic Blueprint and Takeaways for Canada
- Develop ethical and inclusive AI practices (encourage open source tools, prioritize societal values, privacy, fairness, prevent bias and discrimination)
- Collaborate globally with regulators like the UK's CMA, U.S.'s FTC and EU to harmonize AI policies and standards
- Define AI consistently across policies
- Continue stakeholder engagement
The consultation makes one thing clear. AI offers enormous potential for Canada but its benefits won’t be evenly shared unless Canada takes deliberate and strategic action.
A Few Questions About Competition and the Future of Canada's AI Strategy
- What changes are needed to Canada’s Competition Act to address issues like AI price fixing and monopolies?
- How can the government create fair rules for data sharing without holding back private sector innovation?
- Can Canada lead globally by focusing on ethical or responsible AI to stay competitive?
- How can open source AI tools be improved and supported to make it easier for small businesses to compete?
- What steps can Canada take to protect its AI infrastructure from global political risks and supply chain problems?
See:
Davos 2025 Themes and Takeaways for Fintech
Implications of Meta’s Fact-Checking Exit
Elon Musk’s X Challenges California’s Deepfake Law
- What new funding options beyond grants and tax credits could help startups afford access to computing power and data?
- What safeguards are needed to stop AI deepfake scams and harmful decisions made by biased algorithms?
- How can Canada hold companies accountable when their AI systems discriminate in areas like hiring or lending?
- How can Canada stop its top AI talent from leaving the country to work for global tech giants?
- What tools will Canada use to measure the success of its AI strategy in driving innovation, fairness, and trust?
Outlook
The Competition Bureau’s AI and competition consultation report stressed the importance for Canada to address big tech dominance, support Canadian innovation, and ensure fairness in the AI market. The Canadian Sovereign AI Compute Strategy is promising but must come with robust policies, global collaboration, and targeted investments to level the playing field.
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