OpenAI eyes Canada: A deal for cheap energy or sovereignty risk?

OpenAI’s Canada Expansion: Energy Opportunities vs. Sovereignty Risks

OpenAI is considering a major expansion into Canada, attracted by the country’s abundant and affordable energy resources, which are essential for powering its data centers. However, this potential partnership raises significant concerns about digital sovereignty and the control of Canadian data.

OpenAI, the company behind ChatGPT, aims to establish a global network of data centers to support its AI services. Canada’s cheap energy makes it an ideal location for these centers, aligning with OpenAI’s vision of AI as a driving force for future economic growth. The initiative, dubbed "OpenAI for countries," involves discussions with Canadian officials, including Artificial Intelligence Minister Evan Solomon.

The Digital Sovereignty Dilemma

Canada is actively pursuing greater "digital sovereignty," which involves controlling its data and technological infrastructure domestically. Partnering with a foreign entity like OpenAI presents a dilemma, as experts warn it could undermine Canada’s autonomy over its data. Jennifer Pybus, a professor at York University, highlights the risk that foreign companies, subject to their home countries’ laws, could transfer Canadian data elsewhere.

"The challenge is that many foreign companies, especially those based in the U.S., are bound by laws that could compromise Canadian data sovereignty," Pybus explained. "This raises questions about who ultimately controls the data processed in Canada.">

Resource Demands and Data Control

Data centers require immense resources. Pybus estimates that they consume power equivalent to millions of homes and use billions of gallons of water annually for cooling. Guillaume Beaumier, a professor at l'École nationale d'administration publique, questions OpenAI’s commitment to Canadian sovereignty, noting that U.S. laws like the CLOUD Act grant the American government access to data held by U.S. companies, regardless of location.

"The CLOUD Act is a significant concern," Beaumier said. "It means that even if data is stored in Canada, it could still be accessed by the U.S. government under certain conditions.">

U.S. Law and Data Access

Despite ongoing negotiations, Canada lacks a bilateral agreement with the U.S. on the CLOUD Act. Major cloud storage providers like Microsoft, Amazon, and Google own many Canadian data centers, meaning Canadian data remains subject to U.S. jurisdiction. Microsoft has admitted it cannot guarantee data sovereignty to EU members due to the CLOUD Act, further highlighting the challenges.

"The Canada-U.S.-Mexico Agreement also limits data transfer restrictions," Beaumier added. "This complicates efforts to ensure data remains under Canadian control.">

Trust and U.S. Government Ties

Companies claim to seek technical solutions to prevent forced data transfers, but Beaumier notes this comes down to trust. OpenAI holds substantial contracts with the U.S. government, including providing ChatGPT to federal employees and a $200 million contract with the Department of Defense.

"OpenAI’s ties to the U.S. government raise questions about how much faith can be placed in their ability to resist data transfer demands," Beaumier said.

Balancing Progress and Autonomy

Chan Park, OpenAI’s head of U.S. and Canada public policy, maintains there is no tension between the company’s U.S. government ties and its Canadian aspirations. He states they understand the importance of aligning any Canadian AI ecosystem with Canadian values and privacy interests.

"We are committed to supporting Canada’s AI goals while respecting its digital sovereignty," Park said.

Canada’s Path Forward

Canada recognizes the need to tap foreign expertise to advance its AI capabilities. Benjamin Bergen, president of the Council of Canadian Innovators, emphasizes this, but warns that any loss of autonomy could have repercussions. Canada must also foster domestic AI development, as seen in Toronto-based Cohere’s partnership with the government.

"Supporting homegrown cloud services is crucial," Bergen said, "even if they are not yet on the scale of giants like Amazon or OpenAI.">