Business Brief: Proton’s negative reaction to Bill C-22

Good morning. Sweeping legislation that would give domestic law enforcement stronger powers to access digital communications is racking up a list of big businesses who say they’re cutting out on Canada. That’s in focus today.

Up first

In the news

Trade: Canada and the EU will launch a new “alliance for the future” on trade and defence co-operation at a Montreal summit next week, according to a draft joint statement obtained by The Globe and Mail. It also says Canada will be treated as an “associate member” of the 27-country economic.

Transportation: RCMP searched the headquarters of Quebec bus maker Lion Electric.

Trade: Ottawa and Ontario pledged billions in aid for key sectors.

Tech: Canadian organizations are being urged to address web programming vulnerability.

In focus

‘Lawful access’ bill draws growing corporate backlash

The news: Swiss tech-privacy company Proton says it has stopped eyeing Canada for a North American headquarters, and if Ottawa’s lawful-access bill passes in its current form, expansion here would be impossible.

Bart Butler, the company’s chief technology officer, told The Globe’s Marie Woolf that Bill C-22 could compromise privacy safeguards for Canadian users.

The background

The fight is drawing attention to how Canada reconciles digital law enforcement with an urgent push to attract and retain talent – as well as corporate investment.

The Liberal government’s lawful-access bill would require telecoms, internet companies and other digital service providers to make changes to their systems to give surveillance and monitoring capabilities to police services and the Canadian Security Intelligence Service.

CSIS and law enforcement have long argued that Canada is lagging behind its Five Eyes intelligence partners in not having such a lawful-access regime to help investigations. Tech companies say the bill’s requirements go further than those regimes, and could weaken or break encryption and threaten users’ privacy.

Growing company

Proton, which has more than 100 million customers worldwide and uses end-to-end and zero-access encryption, joins a growing list of companies who have warned the bill, if passed, would restrict their ability to expand in Canada or even continue to provide their services.

Earlier this month, Toronto-based Psiphon said it has started drawing up plans to move its operations out of Canada. The service has millions of users globally, including in Iran, Russia and China.

In May, secure messaging service Signal said the company would rather pull out of the country entirely than “be compelled to compromise on the privacy promises we have made to our users.”

Windscribe, a Canadian online-privacy company with more than 100 million registered users, has warned it would also consider leaving the country. Windscribe’s CEO said the bill would make Canada an “untenable place for most companies to operate in, foreign and domestic.

Global risks

Windscribe isn’t blowing smoke. Companies already doing business in Canada are threatening to pull up stakes, and the legislation is running up against a wave of global opposition.

European civil rights organizations used Prime Minister Mark Carney’s high-profile visit last month to warn Canada’s bill could force EU companies operating in Canada to weaken encryption and retain the metadata of European users. “A partner cannot credibly seek deeper digital trade integration while legislating the power to compel European providers to weaken their products in secret,” they said in a letter.

What’s next?

Canada’s efforts to manage its digital space have been the source of trade and corporate friction for years. The country drew the ire of the U.S. government in 2023 when it moved ahead with its Online Streaming Act, and its Online News Act triggered an outright war with Silicon Valley that led to Meta blocking news across Canada.

Ottawa then defied the consensus of the OECD by breaking an international moratorium to push its own unilateral digital services tax in 2024 – a move that became such a major trade irritant with U.S. President Donald Trump that the government completely rescinded the tax in June, 2025, to salvage trade talks. (To the sole benefit of Trump, former cabinet minister Chrystia Freeland wrote in her recently published memoir.)

After passing through the House of Commons in June, Bill C-22 is now getting a sober second thought in the Senate, where changes could be insisted upon before being sent back to the House of Commons, where more changes could be made before another vote, and so on. If it makes it back to Senate, its existence depends entirely upon the Liberal government’s ability to keep a voting coalition together long enough to pass it.

In short, Ottawa’s push for Bill C-22 could stretch on indefinitely – intensifying a battle with domestic and foreign digital companies just as the government aims to paint the country as a more attractive and reliable place to invest.

With files from Marie Woolf

Charted

With today’s high levels of index concentration – the domination of major market indexes by a small number of names – investors may be far less diversified than they think. But that’s not necessarily a bad thing, Andrew Galbraith writes.

Quoted

A First Nation community in Ontario is using a data centre to preserve its heritage.

Up next

More files we’re following

Trickling down? Statistics Canada reports September industrial product and raw-material prices. This could be an interesting follow-up to Monday’s consumer price index, which showed inflation hadn’t sped up much outside of energy.

Abbey Xu and Claire Fan, economists at RBC, said the banks’ measure of how widespread price increases are among industrial products has already shown a “concerning spread,” while more than half of businesses surveyed recently by the Bank of Canada plan to pass higher costs on to customers.

The question is whether those higher costs last long enough to keep working their way down the supply chain, Xu said in an e-mail. “Broadening in producer prices alone isn’t sufficient. History suggests those cost increases only pass through supply chains if they prove to be persistent.”

House calls: Statscan reports September new-home prices. BMO expects them to be down 2 per cent from a year earlier.

Before the bell: Earnings include Winpak, Spotify and Blackstone.

Morning update

Global stocks retreated as Wall Street earnings failed to quell worries ‌over soaring AI investment costs, while escalating Gulf tensions boosted oil and weighed on risk sentiment.

Wall Street futures were in negative territory, while TSX futures followed sentiment lower.

Overseas, the pan-European STOXX 600 was down 1.03 per cent in morning trading. Britain’s FTSE 100 declined 0.46 per cent, Germany’s DAX gave back 1.07 per cent and France’s CAC 40 retreated 1.46 per cent.

In Asia, Japan’s Nikkei closed 2.65 per cent lower, while Hong Kong’s Hang Seng fell 3.03 per cent.

The Canadian dollar traded at 71.27 U.S. cents.