Canada's AI sovereignty is under threat. A handful of companies dominate the foundation model and cloud infrastructure layers, and critical hardware supply chains operate outside domestic control. But Canada still has options to strengthen our capacity, reduce foreign leverage, build partnerships, and modernize our institutions. However, the time to act is short.
Sovereignty in the AI era means freedom from coercion, not digital isolationism or technological self-sufficiency.
Sovereignty in the AI era means freedom from coercion, not digital isolationism or technological self-sufficiency. No country can achieve complete independence across the AI technology stack; the question is how to structure dependencies to preserve choice, reduce foreign leverage, and ensure that Canadian data and infrastructure remain governed by Canadian laws and values.
The United States pursues explicit technological dominance, with American platforms serving as vectors for American jurisdiction and power. China is building a self-sufficient AI stack while exporting open-weight models globally. Middle powers face a choice between dependency on foreign AI systems or technological weakness — but coalition-building and hybrid strategies offer a path beyond this binary.
The majority of new AI investment over the next half decade will reshape the technology stack, particularly for inference and deployment. Decisions being made today about infrastructure, platforms, and standards will shape the landscape for a generation. The architecture is not yet settled, and a deliberate, sovereignty-oriented approach can influence how resources are deployed while the window for action remains open.
Canada's clean energy advantage has attracted substantial data centre investment, and Canadian-owned operators provide domestic alternatives to foreign hyperscalers. Valuable government and private-sector datasets are strategic assets for sovereign AI development. Some Canadian AI companies have achieved global scale and multi-billion-dollar valuations, and a strong open-source ecosystem means sovereignty at the model operations layer derives primarily from infrastructure choices further down the stack.
Canada controls neither the major firms that dominate AI's development nor the critical infrastructure that powers it. Cloud infrastructure is its most acute vulnerability: extraterritorial legal reach means data residency does not equal data sovereignty. At the foundation model layer, a small number of American companies dominate, with only one domestic alternative in Cohere.
Sovereignty is a spectrum, not a binary. Each action that reduces Canada's exposure to foreign leverage strengthens the country's position. Canada has the ingredients: world-leading researchers, abundant clean energy, a world-class foundation model company, a growing sovereign infrastructure ecosystem, and democratic institutions worth protecting. The window to act is open.
Authors
Jaxson Khan (www.jaxson.org) is a technology strategist and policy leader who has spent over a decade driving innovation across the public, private, and non-profit sectors. He is CEO of Aperture AI, a strategic consultancy helping major corporations and governments navigate and capitalize on AI and emerging technologies, a Senior Fellow at the Munk School of Global Affairs & Public Policy at the University of Toronto, and a Board Director of the Human Feedback Foundation. Previously, Jaxson served as Senior Policy Advisor to Canada's Minister of Innovation, Science, and Industry, where he helped design the $2.4 billion AI Sovereign Compute Strategy.
Sean Mullin (www.seanmullin.ca) is an economist and policy leader with over 20 years of experience at the intersection of technology, economic strategy, and public policy. He is a Senior Fellow at the Munk School of Global Affairs and Public Policy, focusing on AI policy and the economics of AI. Sean previously served as Special Advisor to the Prime Minister for Economic Affairs, and founded and led the Brookfield Institute for Innovation + Entrepreneurship, building it into Canada's leading innovation policy think tank. He holds an MBA from Oxford University, an MA in Economics from McGill, and an Honours BSc from the University of Toronto.
Acknowledgments
This report was generously supported by funding from RBC, Cohere, Bell Canada, OpenText, and the Ontario Teachers' Pension Plan. The authors maintained full editorial independence, and the funders did not influence the report's content or findings. The views expressed are those of the authors alone.
The AI Competitiveness Project is hosted at the Munk School of Global Affairs & Public Policy at the University of Toronto. Our mission is to produce pragmatic and actionable policy options to strengthen Canada's long-term competitiveness as artificial intelligence reshapes our economy, national security, and society.
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