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Over the past week, a growing number of tech companies have warned that they may be forced to leave Canada if Bill C-22, the lawful access bill, remains unchanged. The government’s response to warnings from Signal, Windscribe, NordVPN, Apple, and Meta is that the companies are misreading the bill. But the prospect of a tech exodus from Canada rests on clear-cut privacy and security risks that do not apply in the U.S. or Europe. When Yegor Sak, the Toronto-headquartered CEO of Windscribe, told the Globe and Mail last week that he is actively looking at moving the company out of Canada or when Signal’s Vice President of Strategy and Global Affairs Udbhav Tiwari told the same paper that Signal “would rather pull out of the country than be compelled to compromise on the privacy promises we have made to our users,” those statements are a direct response to the government’s legislative choices in the Supporting Authorized Access to Information Act (SAAIA), the second half of Bill C-22, that will have serious economic implications for the future of the tech sector in Canada.
The Act’s definition of “electronic service provider” captures any service involving the creation, recording, storage, processing, transmission, or reception of information, provided either to persons in Canada or by an entity carrying on business activities in Canada. The breadth intentionally covers far more than just telecom companies and Internet providers, extending to platforms, messaging applications, VPN services, and device manufacturers. Every ESP is subject to a general assistance obligation under section 7 and to a secrecy obligation that bars disclosure of the existence of requests. Moreover, the broader set of obligations for core providers, including mandated metadata retention and technical capabilities requirements subject to an inadequately defined exception for “systemic vulnerabilities,” can also be applied to ESPs under the direction of the Minister. When VPNs or messaging services express fears that the law could capture them, it is based on a straightforward reading of Bill C-22.
For a VPN provider such as Windscribe, the metadata retention obligation alone is incompatible with the product. Sak told the Globe that Windscribe currently keeps no IP logs about its users, which is why it has been unable to respond to past RCMP data requests with anything other than the explanation that it has nothing to provide. Indeed, that is how VPNs function. For an end-to-end encrypted messaging service such as Signal, the technical capability obligation causes similar incompatibilities. The service’s value proposition depends on the company itself not having access to the content of communications, which means that a regulation requiring Signal to develop “capabilities related to extracting and organizing information that is authorized to be accessed” can only be satisfied by changing the architecture that makes the service what it is. Tiwari put the point bluntly in his statement to the Globe: “End-to-end encryption is incompatible with exceptional access, no matter how creative the route taken to achieve it.”
What places the Canadian tech sector at risk of an exodus is that U.S. law imposes neither obligation. There is no federal mandatory data retention law in the United States, as the Electronic Frontier Foundation has documented across more than a decade of failed legislative proposals. The closest analog, the preservation provision in 18 U.S.C. § 2703(f) of the Stored Communications Act, allows the government to compel a provider to preserve existing records for up to 90 days while it obtains a court order, with a single 90-day extension available. It is a reactive, targeted mechanism tied to a specific account, not a forward-looking retention mandate covering every user of the service. A U.S.-based VPN or messaging service can therefore lawfully maintain a no-log approach, which is precisely how the no-log policies are built. Given the choice, VPNs and other services will surely leave Canada rather than architect their systems to retain metadata on every single user for a year.
The technical capability situation plays out in much the same way. The U.S. equivalent of the SAAIA is the Communications Assistance for Law Enforcement Act, enacted in 1994, which requires telecommunications carriers to maintain interception capability. CALEA expressly excludes “information services” (a category the statute defines to include “electronic messaging services”) from its scope. The Federal Communications Commission extended CALEA in 2005 to cover facilities-based broadband access and interconnected VoIP, but it has never been extended to over-the-top messaging applications, app-based platforms, or VPN services. Successive proposals to update CALEA, beginning with the Department of Justice’s “Going Dark” campaign in the early 2010s and continuing through bills such as the Lawful Access to Encrypted Data Act of 2020 and the recurring iterations of the EARN IT Act, have all failed to become law. The most direct test of whether U.S. courts would compel a non-CALEA provider to build capabilities to defeat encryption, the Apple-FBI litigation over the San Bernardino iPhone in 2016, ended with the Justice Department withdrawing its application and no statute has since been enacted to fill the gap. A U.S.-based encrypted messaging service therefore operates in a regulatory environment with no equivalent to Bill C-22.
These are not theoretical comparisons. When India’s Computer Emergency Response Team issued a directive in 2022 requiring VPN providers to retain customer information for five years, ExpressVPN, NordVPN, Surfshark, and other major providers responded by withdrawing their physical servers from the country and offering Indian IP addresses through virtual servers in Singapore and the United Kingdom. India’s Minister of State for Information Technology at the time, Rajeev Chandrasekhar, told the companies that if they did not like the rules they could leave and so they did so.
In Europe, the Court of Justice of the European Union struck down general data retention regimes in Digital Rights Ireland in 2014 and Tele2 Sverige in 2016, and has continued to constrain them in later rulings. Germany’s Federal Constitutional Court has imposed similar limits, and general retention obligations on email providers remain unlawful there. The jurisdictions that have moved in C-22’s direction are precisely the ones where major services have begun to exit or restrict features. The United Kingdom’s Investigatory Powers Act sparked Apple’s withdrawal of its Advanced Data Protection feature from the UK market rather than comply with a Technical Capability Notice ordering it to create access to encrypted iCloud data, and Apple is now litigating that order before the Investigatory Powers Tribunal. Switzerland’s recent attempt to extend its surveillance ordinance to VPN providers and encrypted messaging services prompted Proton to begin moving infrastructure out of the country to Germany before the Swiss Federal Council paused the amendment pending an impact study. Where jurisdictions impose obligations of the kind Bill C-22 contains, privacy-protective services have either left, scaled back, or restricted features.
The compliance obligations on Canadian electronic service providers under Bill C-22 do not apply to a U.S.-based competitor, are limited or unconstitutional in much of Europe, and have led to exits or feature withdrawals in jurisdictions that have imposed them. The companies aren’t bluffing and they aren’t misreading the bill. Rather, they are responding to an outlier approach that threatens the Canadian tech landscape with obligations that place the privacy and security of millions at risk.
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