AI sovereignty in the spotlight as Microsoft Canada gets new president

Microsoft Canada president Matt Milton at the company's offices in Calgary, Alta., Monday, Oct. 6, 2025. THE CANADIAN PRESS/Jeff McIntosh

TORONTO — If the new president of Microsoft Canada is concerned that a trade war with the United States will diminish his employer’s stature north of the border, he’s not showing it.

Instead, Matt Milton addresses most questions about the challenges facing his company with Microsoft’s resumé — 40 years in Canada and millions in annual investments in the Canadian economy.

The achievements have made him “completely confident” Microsoft is the “the right Canadian organization” to be in the mix as the country considers the future of AI, he said in his first interview since taking on the top job six weeks ago.

The trouble? These days Canada’s taking a more critical look at sovereignty and while Microsoft has been in the country since 1985, it’s ultimately an American company.

That might not have bothered Canada when its tight relationship with the U.S. seemed eternal, but now that President Donald Trump is its chief aggressor, the country is on the brink of a reckoning around how far it will take its patriotism.

Its first test in the world of tech could be the country’s artificial intelligence strategy, which is being crafted now for release by the end of the year, or the sovereign cloud Prime Minister Mark Carney casually mentioned wanting to build at a September press conference on major projects.

Sovereign clouds give users greater control over their data’s residency and privacy by dictating where information is kept, who can access it and, most important to Microsoft, which technology will safeguard it. The most stringent sovereign clouds store information in servers physically within a country’s borders and are powered with infrastructure developed in that nation, so data is protected from outside governments and companies.

The federal government has said its forthcoming strategy is meant to “position Canada at the forefront” of the AI revolution. It has solicited feedback on commercialization, research, talent, infrastructure and security to help it craft the policy.

In Microsoft’s best-case scenarios, the country’s AI strategy does little to hamper its AI tools like chatbot Copilot and any sovereign cloud it builds leaves room for the company’s computing platform Azure to keep growing. In the worst scenarios, Microsoft’s wants are punted to the back of the line, if they’re considered at all, and Canada starts fuelling domestic competitors.

Regardless of where Canada lands, it’s justified to be having these discussions, said Milton, who is Ottawa-born but spent the last 25 years at U.S. tech companies Kyndryl and IBM.

“This is no different than the questions we asked when we entered the internet age, or when we entered the cloud age,” he said.

But when Canada faced those technological changes, the mood was different.

It celebrated every time a U.S. tech giant opened another facility in Canada and gave the people running them plenty of facetime with politicians who didn’t open their schedules as wide to homegrown firms, said Neil Desai, a senior fellow at the Centre for International Governance Innovation and one-time manager of strategic planning for former prime minister Stephen Harper.

Those ways have been shifting as the tariff war has suddenly made everyone into an “economic nationalist,” Desai said.

Now, conversations about how to tackle AI are more seriously considering what can be done to advance Canada’s place in the industry and taking on an urgent tone because AI is rapidly upending how we work, live and play.

“It moves so quickly that what was fact two weeks ago is fiction today,” Milton said.

He senses Canada doesn’t want to just keep up; it wants to lead and he’s determined for his company’s infrastructure to play a role in that push.

Microsoft has 5,300 employees in the country and 17,400 partners using its technology. It estimates it contributes $60 billion to Canada’s GDP each year and since 2023, has invested more than $828 million to expand its Azure public cloud and AI infrastructure in Québec alone.

“We’ve been here 40 years. We’ve made a lot of big investments,” he said. “We’re not planning to jeopardize any of those, and we plan to continue to make significant investments here.”

Guillaume Beaumier, an assistant professor of political science and international studies at l’École nationale d’administration publique in Quebec, sees this kind of chatter as a lobbying tactic aimed at reframing the debate about sovereignty “in a way that still allows them to operate in the Canadian ecosystem.”

It will likely work because governments largely see tech firms like Microsoft as “too big to abandon.”

“They’ve been so entrenched in our system that the likelihood of the government really trying to push them aside or abandon them is very low,” he said.

While there’s no homegrown behemoth quite like Microsoft, Desai said there are many domestic companies that can slot into the country’s AI future.

He suggested Ranovus, an Ottawa tech firm, could supply the chips and Toronto-based ThinkOn the data storage. ThinkOn announced Wednesday that it was part of a group of Canadian tech companies that launched a “sovereign AI-ready” cloud for governments.

But Desai also said Canada has to realize sovereignty is a spectrum — quickly.

“It’s not necessary that we have an Azure cloud facility with OpenAI algorithms and chips from Nvidia and that would be foreign and then, some other thing that was built by a bunch of Canadians from ground up that would be sovereign and Canadian,” he said.

“It is possible that they can be part of it, but we shouldn’t consider this a binary because we’ll just twiddle our thumbs for decades and all the while, we’ll see another major technology trend pass us by.”

This report by The Canadian Press was first published Oct. 13, 2025.

Tara Deschamps, The Canadian Press