Prof Justin Robin­son

Cana­da abrupt­ly can­celled its dig­i­tal ser­vices tax less than 24 hours be­fore col­lect­ing US$2 bil­lion from tech gi­ants. The trig­ger wasn’t Sil­i­con Val­ley lob­by­ing—it was Pres­i­dent Trump’s threat to sus­pend trade ne­go­ti­a­tions, call­ing the tax “an at­tack on Amer­i­ca.”

While this ca­pit­u­la­tion is in the area of tax sov­er­eign­ty, it il­lus­trates the lever­age the USA has when its will­ing to weaponise trade and should alert the world to a stark re­al­i­ty: dig­i­tal de­pen­dence on the USA and how dig­i­tal in­fra­struc­ture can be­come a lever of eco­nom­ic co­er­cion that ex­tends far be­yond tra­di­tion­al trade re­la­tion­ships.

While glob­al de­bates fo­cus on Chi­na’s trade dom­i­nance, there’s been lit­tle scruti­ny of Amer­i­ca’s dig­i­tal hege­mo­ny. Five US com­pa­nies—Google, Ama­zon, Meta, Ap­ple, and Mi­crosoft—con­trol the world’s dig­i­tal in­fra­struc­ture. Google process­es 90 per cent of glob­al search­es. Ap­ple and Google’s app stores de­ter­mine which ser­vices reach smart­phones world­wide. Meta con­nects three bil­lion users dai­ly.

This con­cen­tra­tion means bil­lions of peo­ple, busi­ness­es, and gov­ern­ments de­pend on Amer­i­can-con­trolled plat­forms for com­mu­ni­ca­tion, com­merce, da­ta stor­age, and es­sen­tial ser­vices. Yet while “dom­i­nance of and de­pen­dence on Chi­na” in sup­ply chains sparks con­stant de­bate, sim­i­lar “dom­i­nance of and de­pen­dence on USA tech” is ac­cept­ed as nat­ur­al.

Dig­i­tal plat­forms func­tion as crit­i­cal in­fra­struc­ture but re­main un­der pri­vate con­trol aligned with spe­cif­ic na­tion­al in­ter­ests. Re­cent ex­am­ples show how this cre­ates lever­age:

* Con­nec­tiv­i­ty con­trol: Elon Musk’s Star­link de­ci­sions af­fect­ed Ukraine’s mil­i­tary com­mu­ni­ca­tions;

* App-store pow­er: Re­mov­ing ap­pli­ca­tions can elim­i­nate ser­vices from en­tire pop­u­la­tions;

* Pay­ment Sys­tems: Dig­i­tal proces­sors can iso­late coun­tries eco­nom­i­cal­ly

* Bor­der Con­trol: For­eign stu­dents seek­ing US visas may face so­cial me­dia search­es—a dig­i­tal strip search

This dig­i­tal con­cen­tra­tion rais­es fun­da­men­tal ques­tions about eco­nom­ic au­ton­o­my. When es­sen­tial func­tions de­pend on for­eign-con­trolled plat­forms, tra­di­tion­al con­cepts of in­de­pen­dence re­quire re-ex­am­i­na­tion.

Dig­i­tal in­fra­struc­ture can be mod­i­fied or weaponised much faster than phys­i­cal in­fra­struc­ture, cre­at­ing new dy­nam­ics in in­ter­na­tion­al re­la­tions. The is­sue ex­tends be­yond mar­ket com­pe­ti­tion to ques­tions about who con­trols the in­fra­struc­ture en­abling mod­ern eco­nom­ic ac­tiv­i­ty.

* Chi­na rep­re­sents the most com­pre­hen­sive ex­am­ple of dig­i­tal sov­er­eign­ty, hav­ing de­vel­oped do­mes­tic al­ter­na­tives across vir­tu­al­ly every ma­jor plat­form cat­e­go­ry:

* Search: Baidu dom­i­nates with over 70 per cent mar­ket share in Chi­na;

* So­cial me­dia: WeChat (Ten­cent) com­bines mes­sag­ing, pay­ments, e-com­merce, and gov­ern­ment ser­vices for over 1.3 bil­lion users;

* E-com­merce: Al­iba­ba’s Taobao and Tmall plat­forms han­dle more trans­ac­tions than Ama­zon glob­al­ly;

* Pay­ments: Ali­pay and WeChat Pay process the ma­jor­i­ty of Chi­na’s dig­i­tal trans­ac­tions;

* Video: Douyin (Tik­Tok’s Chi­nese ver­sion) and oth­er do­mes­tic plat­forms dom­i­nate en­ter­tain­ment; and

* Cloud Ser­vices: Al­iba­ba Cloud, Ten­cent Cloud, and Baidu Cloud serve the mas­sive Chi­nese mar­ket.

Chi­na’s ap­proach demon­strates that com­pre­hen­sive dig­i­tal sov­er­eign­ty is pos­si­ble, but it re­quires enor­mous state co­or­di­na­tion and mar­ket pro­tec­tion.

Cana­da’s ex­pe­ri­ence pre­views broad­er chal­lenges. As dig­i­tal plat­forms grow in im­por­tance, the re­la­tion­ship be­tween tech­no­log­i­cal de­pen­den­cy and eco­nom­ic sov­er­eign­ty will de­fine the next decade. Na­tions face a choice: ac­cept dig­i­tal vas­salage or in­vest in in­de­pen­dence.

The mes­sage from Cana­da’s ca­pit­u­la­tion is un­mis­tak­able: chal­lenge US dig­i­tal gi­ants and face eco­nom­ic co­er­cion. Imag­ine the threats fac­ing any na­tion at­tempt­ing true dig­i­tal in­de­pen­dence. The age of dig­i­tal em­pire is here—the ques­tion is whether na­tions will chart a path to­ward sov­er­eign­ty or ac­cept al­go­rith­mic sub­mis­sion.