Carney is Selling Off Canada’s Publicly Owned Tech Gem. Why?

The Liberal government led by Prime Minister Mark Carney has made policy that reflects, to a remarkable degree, the “memos” pumped out by the upstart pro-tech, anti-regulator advocacy group Build Canada. And Build Canada has plenty more it wants the government to do, some of its vision quite radical, as the first article in this series detailed.

It is unlikely a coincidence that Build Canada's agenda to reform the country, if implemented, would also boost the wealth of its members and the bottom lines of their businesses.

While the organization claims it does not lobby government directly, executives from two companies at the heart of Build Canada have met repeatedly with the Carney Liberals. According to the federal Registry of Lobbyists, Shopify has held 12 meetings with the government since the election. AI firm Cohere, meanwhile, has met with the government 31 times.

Cohere’s ties with Build Canada

Last August, the Carney Liberals contracted Cohere to "transform the public sector" with AI technology. In April, that transformation began to take effect with another government contract for the deployment of Cohere's AI tools within the federal department of innovation to support automation of some tasks. A Cohere spokesperson referred to the deployment as "a technical blueprint for how the rest of the federal government will modernize.”

Cohere has come under criticism for ties to U.S. tech companies, including its reported but disputed relationship with Palantir, a company the American Civil Liberties Union accuses of "providing tools to facilitate the violence, lawlessness and human rights violations of President Trump’s war on immigrants."

Cohere is also being sued by a group of media companies from Canada, the United States and the United Kingdom for copyright infringement via the unauthorized use of news articles to train the tech firm's large language models.

One of Build Canada's earliest backers was Cohere co-founder Ivan Zhang. In November, Zhang wrote a memo for Build Canada calling for the government to "commercialize the Canadian Photonics Fabrication Centre."

Last month, the federal government confirmed plans to do just that, announcing it would be privatizing the CPFC, and along with it control over the centre's publicly built technology.

Established over 20 years ago, the CPFC, an arm of the National Research Council of Canada, is described as being at the forefront of innovation in the country, supporting both research and the private sector. Specifically, the centre makes photonic devices using compound semiconductor materials. These chips allow more energy-efficient, faster movement of data. In addition to aerospace, automotive, defence and telecommunications industry uses, the chips are increasing vital to AI technology.

The federal government has invested more than $115 million into the centre over the last five years, including to support an ongoing expansion from its current, 40,000-square-foot Ottawa-based facility.

The CPFC is one of only a few of its kind worldwide and the only one in North America, with the centre's website noting, "as the world races to build AI infrastructure and next-generation technologies, the CPFC is driving innovations that enhance national security, reinforce Canada's technological sovereignty and secure our place in the global supply chain."

Warnings against the CPFC sale

Prime Minister Carney is on record saying he sees "the effectiveness" of flooding the zone, the crass, MAGA-created euphemism for disorientating political opponents and critics by moving rapidly on a wide variety of issues. That an announcement on the looming sell-off of the CPFC did not generate wide attention among the many recent policy actions and political decisions of the government is therefore both unsurprising and politically convenient for the Carney Liberals.

Still, some people did notice and among them are voices warning about the potential risks of selling off publicly-owned and developed critical technology while reminding the government of the country's regrets over previous privatization decisions.

Tech banker and historian Matt Roberts, for example, recently argued that the government was taking a consequential, irreversible structural decision about the future of Canada’s semiconductor capability without having a national strategy to answer questions such as, "What happens to the researchers at the CPFC when the commercial incentives of a private entity diverge from the public interest of training the next generation of Canadian semiconductor engineers? What happens to the small Canadian companies that currently access the facility at subsidized rates — the ones who are not yet commercial enough to pay market prices? What metrics will we use to decide, in five years, whether this was the right call?"

Senator Colin Deacon has also spoken out, citing the example of the privatization of Connaught Medical Research Laboratories in the 1980s and the loss of domestic vaccine technology that was evident during the height of the COVID-19 pandemic.

Indeed, this country has a poor track record on privatizing public assets such as CN Rail and failing to protect innovation as in the experience with Nortel.

While both the Carney government and Cohere's Build Canada memo promise the sell-off of CPFC could spur wider economic growth while maintaining control of the technology in Canadian hands, that is far from clear and precedent suggests otherwise.

What does appear clear is that Canada's tech companies want a private piece of this public asset, and perhaps, so do the American companies some of them are affiliated with. Indeed, among Build Canada's evolving policy proposals is a recent call to allow the approval of foreign ownership of telecommunications companies.

This increasing alignment between many of this country's tech broligarchs and their American cousins is cause for alarm. Last week, Shopify executives were robustly defending Elon Musk and lauding his new, trillionaire status. If Build Canada is already borrowing from U.S. tech leaders' views on economic priorities and political policy, Canadians should be alert to what could come next — more overt attacks on democracy.

Tomorrow the series ends with a close look at how Build Canada doesn’t just work to win Canada’s human politicians to its side. The organization has built a digital “member of parliament” to model the proper way to vote in step with its ideology.

Read part one of "Carney and the Broligarchs.” Tomorrow, the third and last in the series.