Parting Clouds: Creating a Competitive Marketplace for Compute

Three American firms — Amazon, Microsoft, and Alphabet — control 85% of Canada’s public cloud market. The federal government alone spent over $156 million on cloud services in 2022–23, the majority of it flowing to Microsoft and Amazon. For Canadian businesses, from early-stage startups to the country’s largest enterprises, there are no practical alternatives.

That concentration is a competition problem. Vendor lock-in through proprietary technologies, opaque and complex billing, bundling and tying, and the foreclosure of adjacent markets, including the evolving market for artificial intelligence, are  predictable consequences of this oligopoly market. But Canada’s dependence on a handful of US hyperscalers represents a risk to sovereignty as well as competition. A country locked into a small number of providers lacks meaningful choice, whether the threat is coercion by a foreign government or rent extraction by an uncontested monopolist.

In a new report, CAMP argues that the most effective response is commoditization: making cloud infrastructure a fungible resource where interoperability standards allow workloads to move freely between providers. The metric for success is not who owns the infrastructure but whether customers can make competition work for them.

To create a competitive marketplace for compute, policymakers should:

• Require interoperability and portability certifications in all federal cloud procurement, ratifying dominant de facto standards rather than inventing new ones
• Attach binding interoperability conditions to any domestic cloud investment programs, to avoid entrenching new domestic monopolies
• Coordinate with like-minded middle powers to align procurement standards and create demand-side pressure no single country can generate alone
• Eliminate egress fees, ban self-preferencing and discriminatory bundling, and treat cloud computing as utility-like infrastructure subject to neutrality rules
• Designate a dedicated industry regulator with the technical capacity to monitor and enforce conduct and standards requirements
• Direct the Competition Bureau to launch a cloud market study and open enforcement proceedings targeting bundling, tying, predatory cloud credits, and discriminatory licensing
• Prioritize removal of CUSMA’s constraints on digital market regulation in Canada’s 2026 renegotiations