The president calls the project “the most important commitment in the history of Microsoft Canada.”
Microsoft says it will spend C$7.5 billion over the next two years to build new digital and artificial intelligence (AI) infrastructure in Canada – infrastructure that the US tech giant says will support Canada's digital sovereignty.
The funding will go towards expanding computing capacity in Microsoft Azure's two main data center regions: Canada Central in Toronto and Canada East in Quebec. The company announced its expansion into blog post on Tuesday, written by Microsoft President and Vice Chairman Brad Smith.
Microsoft has promised to “store Canadian data on Canadian soil,” but experts say storing data in Canadian data centers does not guarantee data sovereignty.
Smith says expanded data centers will support everything from modernized government services to cutting-edge innovations in artificial intelligence. He expects this new capacity to begin coming online in the second half of 2026.
Along with its data center expansion, Microsoft is also launching a company-wide five-point plan that it says will “promote and protect Canada's digital sovereignty.” This initiative, she argues, is “as important” as its investment in artificial intelligence infrastructure.
Microsoft, which opened its first Canadian office in Toronto in 1985, today has more than 5,300 employees in 11 cities across the country and 17,000 corporate partners. In a blog post, Smith called the moves “the most significant commitment in Microsoft Canada's history.” The $7.5 billion investment is part of $19 billion in spending Microsoft has committed to Canada between 2023 and 2027. BetaKit contacted Microsoft Canada to confirm how much of the $19 billion was net new funding, but in an email response, Microsoft simply repeated what was in the funding announcement.
As part of the announcement, Microsoft pledged to “keep Canadian data on Canadian soil,” challenge any government requests to provide data about Canadian Government customers “when legally possible,” and “vigorously protect the continuity of cloud services for Canadian Government customers” from any orders to suspend or cease operations in Canada, using “all available legal and diplomatic options.”
But experts say that storing data in Canadian data centers does not guarantee data sovereignty. Under US CLOUD Act and the Foreign Intelligence Surveillance Act (FISA), there are circumstances in which data hosted on servers owned by US companies may be disclosed to US law enforcement upon request. The Canadian government has called FISA “a major risk to data sovereignty.” White Paper 2020.
Recent evidence from France calls into question Microsoft's ability to protect the sovereignty of Canada or other countries. Earlier this year, a Microsoft spokesperson admitted in a French court that the firm could not guarantee that French citizens' data would be safe from US agencies, even if French authorities had not given explicit permission to release it.
“Microsoft does not provide any government with direct and unfettered access to customer data,” a Microsoft spokesperson said. told BetaKit in September. Data requests are subject to “careful review” to ensure they are legally valid and “limited to specific account identifiers.”
Definition of digital sovereignty
Digital sovereignty is a term often used to refer to a country's ownership of the infrastructure underpinning its artificial intelligence and cloud computing, from data centers to chips, data and models. This year US trade war led Canadian companies and governments to overestimate your confidence about American cloud computing giants such as Microsoft, Amazon and Google.
In September, Prime Minister Mark Carney announced plans create a “Canadian sovereign cloud” through the government's new Major Projects Office to counter US dominance. But industry observers noted that building an independent cloud stack will not be an easy task, given that building such an infrastructure will be complex, time-consuming and expensive.
Some industry players and experts believe that creating more Canadian-owned digital infrastructure could not only give Canada more control over its technological future, but also help unlock the full potential of the country's artificial intelligence industry. But the Treasury report found that achieving full digital sovereignty may be an impossible task for the feds.
CONNECTED: Canada hopes to create a sovereign cloud to counter US dominance. It won't be easy
The Government of Canada has so far taken a broad view of the concept of sovereignty. Minister of Artificial Intelligence and Digital Innovation Evan Solomon, who has repeatedly stated that “sovereignty does not mean loneliness” –doesn't have excluded the possibility of US participation and claimed that Partnerships with foreign multinationals will play a necessary role.
Microsoft, Developer ChatGPT OpenAIAnd 1Okta competitor password are among the U.S. companies vying to participate in the effort, along with Finnish telecom giant Nokia, which is expanding its presence in Ottawa with $40 million in federal funding. much to our chagrin some Canadian technology leaders and lobbyists.
Solomon has protected federal investment in Nokia, arguing there is “room for both” successful Canadian businesses and international players looking to grow in Canada.
Image provided Microsoft.
