DZSURDZSA: Ottawa says use VPNs but kindly leave a backdoor for us
Ottawa has spent a decade butting heads with tech companies over ghastly laws that kill innovation and drive entrepreneurs away.
Public Safety Canada recently posted advice encouraging Canadians to use VPNs online to better protect their privacy.
It was sensible advice when taken out of political context.
I use a VPN and you should too. But it ultimately didn’t play well with the general public and backfired.
That’s because Ottawa is simultaneously telling Canadians to shield themselves online while major VPN and other encryption-based platforms are threatening to pull out of the country, all because of Bill C-22.
This contradiction has become typical of Ottawa. One arm of the federal government reminds citizens to lock their doors, while another is drafting legislation designed to make it easier to kick those doors down. The attitude extends beyond tech and into the real world, where lax bail laws are emboldening criminals.
Bill C-22, the Lawful Access Act, introduces sweeping powers that would compel digital service providers to retain highly sensitive user data and location history for up to 365 days without any evidence of a crime. More alarming still, it aims to force companies to build technical “backdoors”, so state agencies can easily extract user data.
Signal, NordVPN and Canadian-headquartered Windscribe have already issued an ultimatum threatening to pull out of Canada entirely rather than play a role in spying on Canadians.
Tech companies understand something politicians refuse to acknowledge: there is no such thing as a secure backdoor.
Vulnerabilities, once in place, affect everyone and can be exploited not only by the government but also by malicious actors.
This isn’t the first time the Liberals decided that engaging in a head-butting match with big tech was the way to move forward. Although the Liberal government, now operating under a majority mandate led by Prime Minister Mark Carney, has attempted to portray itself as a patron of high tech, the record shows otherwise.
For example, Meta continues to block Canadians from accessing news on its social platforms, mainly Facebook and Instagram, because of the Online News Act and there are no signs that the legislation is going anywhere.
Then there’s also the fallout from the Online Streaming Act. Passed to give the CRTC authority to prioritize “Canadian content” online, the law has essentially allowed regulators to dictate what Canadians are allowed to see on their feeds. It has also raised the ire of the United States, home to many major streaming companies like Amazon Prime and Netflix.
Bipartisan frustration is boiling over. Just last week, U.S. lawmakers introduced legislation to trigger Section 301 investigations into Canada’s digital regulations, labelling the Online Streaming Act as discriminatory against American streaming services and digital creators. The threat of retaliatory measures, including tariffs and changes to U.S. trade deal concessions, is very real.
It’s the same story as what happened with the Digital Services Tax. The government aggressively pushed the tax, dismissing widespread opposition from domestic business groups and Washington. It took an abrupt threat from U.S. President Donald Trump, who froze trade negotiations and promised retaliatory tariffs over the law. Ultimately, it forced Finance Minister François-Philippe Champagne to perform a sharp U-turn and halt the tax in a bid to rescue the Canada-U.S. economic partnership.
If anything, the Liberal approach to tech has been erratic and adversarial and it’s having economic consequences.
Canada still boasts roughly 23,000 tech startups on paper, but the actual rate of new business creation has cooled significantly. New firm entry rates have dropped to just 12.3% of active businesses, down from 15.2% sixteen years ago and nearly half of the 25% entry rates seen in the 1980s. Despite massive population growth, Canada creates virtually the same number of total new businesses annually today as it did a decade ago.
Then there’s also the brain drain problem. Ecosystem tracking indicates that only about one-third of Canadian-founded startups that raise $1 million or more choose to keep their headquarters here.
Instead of courting tech companies with proven performance, the Liberal government has opted for the only thing it knows how to do: getting its ham-fisted government paws on deploying tech itself and in almost every instance, it has proven to be an unmitigated disaster.
Look no further than the Cúram project, the software system used to distribute federal payments like Old Age Security. Launched nearly a decade ago, it remains plagued by chronic issues. Originally estimated to cost $1.75 billion, the projected cost has ballooned to a staggering $6.6 billion, with the vast majority of taxpayer dollars funnelled to private IT consulting firms.
Then, of course, there is ArriveCAN. How could we forget ArriveCAN, also known by detractors as “Arrive Scam”? What was supposed to be a simple $80,000 border-screening app during the pandemic ballooned into a $59.5 million debacle, complete with criminal investigations. Federal procurement rules were bypassed to favour a two-person consulting firm that did no actual coding but raked in $19 million, even helping write the criteria for the very contracts it bid on.
Now, the Liberals have proposed a new pipedream: building a national AI supercomputer.
Start-ups are hard. It’s part of the black humour prevalent among tech entrepreneurs to joke about how many companies they’ve started that failed. But the Canadian government has no reason to fail. In fact, its massive resources and ability to write rules in its own favour should give it a significant advantage in ensuring success. And yet it fails consistently. Why?
The Canadian government seems to fundamentally misunderstand how a healthy tech ecosystem operates and as a result is driving entrepreneurs away. Tech companies don’t want to operate in a jurisdiction that treats them as an auxiliary branch of domestic intelligence, where their technology is co-opted to spy on Canadians.