Microsoft's AI deal guarantees digital sovereignty for Canada, but is that a promise they’ll keep?

In the past yr, few words have been more abused than “sovereignty,” particularly within the context of Canadian digital policy and artificial intelligence. At the start of December, Microsoft promised to take a position greater than $7.5 billion over the following two years to construct a “recent digital and AI infrastructure” in Canada. This investment is secured by a deposit that it’ll “arise to defend Canada’s digital sovereignty.”

Framing the investment when it comes to protecting Canadian sovereignty isn’t any coincidence. Politically, Countries are increasingly concerned that U.S.-based technology firms are facing pressure from President Donald Trump's increasingly authoritarian administration handy over foreign residents' data, trade secrets, emails and any activity or metadata generated on their systems to the U.S. government.

If you're wondering how a U.S. company's investments in essential digital infrastructure may help protect Canadian sovereignty, you're not alone. It cannot and won’t achieve this, for the straightforward reason that Microsoft – and other technology firms based or doing business within the US – promise something that’s beyond their control to implement.

Data sovereignty

In its simplest sense, sovereignty is the flexibility of a state to regulate what happens inside its borders and what goes beyond those borders. It involves other features, resembling whether a state is recognized by other states, but fundamentally it’s about control.

Testimony before a French Senate committee in June 2025 Anton Carniaux, director of public and legal affairs at Microsoft France, examined the problem of public procurement and digital sovereignty and was asked whether he could guarantee under oath that data couldn’t be transferred to the US government without the consent of the French government. He replied, “No, I can’t guarantee that, nevertheless it’s never happened before.”

Carniaux's response reminds us that the United States, through its 2018 has claimed the best to exercise control over data collected by U.S. firms, even whether it is stored outside the country. In other words, American law specifically requires that U.S. law take precedence over the laws of other countries.

This is a transparent violation of any definition of sovereignty when it comes to control. In response: Microsoft promised write “in contracts that Microsoft will challenge any government demand for Canadian data if there are legal grounds to achieve this.”

Although it sounds reassuring, Microsoft's promise is smaller than it seems. Not only does their involvement leave it as much as Microsoft and US courts to guage the validity of a claim, however the law itself is simply half the issue.

Mass surveillance

The mass illegal surveillance of world communications by US secret services, was revealed in 2013 by whistleblower Edward Snowdenwas funded by American technology firms. The U.S. National Security Agency collected vast amounts of knowledge about people around the globe, including non-American residents, by listening to the servers of Internet firms.

American firms are uniquely exposed to pressure from the US government. They depend on the federal government to barter favorable international agreements and likewise to be a serious buyer of their goods and services.

As Research by York University criminology professor Natasha Tusikov has foundThe U.S. also engages in “shadow regulation,” pressuring private firms to satisfy government objectives that transcend legal requirements—and even, as Tusikov points out, pursuing policies explicitly rejected by democratically elected legislatures.

All of this happened before the Trump era. And given his clear disregard for the principle of sovereignty and American tech firms' close ties to the federal government, misuse of the non-American data stored by his tech firms is entirely possible.

The Carney administration is vague about sovereignty

As misleading as Microsoft's guarantees could also be, it’s the Canadian government that’s taking the loosest approach to digital sovereignty talks. Prime Minister Mark Carney appears to have won the federal election based on his promise Protect Canadian sovereignty from the rapacious United States.

While the Prime Minister a “Canadian state cloud“It's unclear exactly what meaning. Evan Solomon, Canada's minister accountable for advancing AI, has expressed openness to including U.S. firms like OpenAI (a Microsoft partner) in Canada's Sovereign Cloud and suggested that this might be the case “Hybrid models” with “multiple players”.

Solomon argued that too “Sovereignty doesn't mean loneliness… we are able to't consider AI as a walled garden. Like, 'Oh, we are able to never take money from X or Y.'”

It is true that sovereignty isn’t absolute. The real world is rather more chaotic than a world divided into neat, discrete parcels, as implied by the principle of territorial sovereignty. No community or state is totally self-sufficient.

We live in a worldwide world of economic and social connections. Global governance includes a mixture of national laws, international agreements, and formal and informal cross-border working relationships. Countries profit after they can draw on expertise and resources that they lack at home.

But Microsoft and Solomon's comments ignore the deeper problem that arises from focusing an excessive amount of on abstract concepts like “sovereignty.” Canada's problem will not be the abstract lack of Canadian sovereignty. It is the US that has violated Venezuela's sovereignty, threatened others (including Canada) with annexation, and is led by a president who has done so explained himself about international law.

regaining control

Sovereignty is about control. In the digital age, power lies with those that control the software and data. Canada's problem is that American firms control huge swaths of Canada's essential digital infrastructure, including recent AI technologies and cloud services, but additionally email and the increasingly connected office software that underpins our entire society.

There is a reason for this France and Germany work together on an alternative choice to Google Docs.

Unless the United States could be trusted to respect domestic and international laws, firms based or operating within the United States shall be vulnerable to political pressure. This could potentially include collecting Canadians' data for political and economic reasons and blocking our access to their products or limiting their functionality.

These hard facts about control, moderately than abstract considerations of sovereignty, needs to be our place to begin for discussions about Canadian digital policy.