Canada's AI Strategy Bets on Government Buying Power to Help Firms Go Global
Ottawa unveiled a national AI strategy Thursday that promises to help Canadian tech companies compete internationally by becoming a customer itself and providing export support. The approach targets a gap: firms like Montreal-based Coveo generate 97 percent of revenue from outside Canada, yet the federal government remains a minor customer.
The strategy commits Ottawa to act as a "strategic anchor customer" for Canadian AI scale-ups. Tech executives say a government contract delivers two things: immediate revenue and credibility with foreign buyers.
Coveo's chair Louis Têtu said he would have welcomed a Canadian government contract when an Australian Taxation Office official asked if Ottawa used the company's technology. "I would have loved to say, 'Yes,'" he said. Coveo signed a non-binding agreement with the federal government in December to explore using its AI tools in public services.
Infrastructure and Talent as Competitive Tools
The strategy also commits to sourcing more AI processing power from Canadian providers and exploring capacity purchases and direct funding for large data centres. Companies that build infrastructure for government projects learn what major clients need and can prove themselves to foreign customers.
Simon Ahdoot, CEO of Montreal-based Hypertec, said the model works in steps. "You build up capabilities by doing progressively larger deals," he said-a 10-megawatt data centre project helps firms land a 50-megawatt one, then 100 megawatts and so on.
Ottawa also plans to deploy diplomats and trade commissioners to market Canadian AI firms internationally and to open sales opportunities through technology agreements with other countries.
The government is particularly focused on foundation models-the multi-functional systems powering tools like ChatGPT and Claude. Canada is one of only four countries developing such models, Prime Minister Mark Carney said Thursday. Ottawa has already backed Cohere with financing and contracts, including support for its acquisition of German AI startup Aleph Alpha.
The "Canadian" Advantage
Cohere co-founder Nick Frosst said being Canadian helps internationally. "Lots of countries are looking for partners that share their values and share how they think the technology should be deployed," he said. The firm has positioned itself as a sovereignty alternative-customers control the software by running it on their own infrastructure.
Hypertec is also seeing benefits. Last June it announced a partnership with San Francisco-based Together AI to set up two gigawatts of compute capacity in Europe. Ahdoot said he's noticed warmer receptions from European customers and partners over the past year. "It's almost like the different ministers and the prime minister have been working in business development for Canadian companies as a whole," he said.
Talent and Research Gaps
Ottawa aims to increase AI research chairs from 143 to nearly 200 to attract top researchers. Elissa Strome, executive director at non-profit CIFAR, said expanding positions sends "a very strong signal" to researchers to consider Canada.
The country still faces obstacles. Canada ranks eighth on The Observer's AI Index, behind the U.S. and China but also smaller economies like Singapore, South Korea, and Israel. Canada's score is weighed down by lack of infrastructure and negative public attitudes to AI.
Têtu cautioned that companies can't wait for government support to materialize. "We would be bankrupt if we had waited," he said.
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