Canada recently 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 United States (US) President Donald 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 US has when it is willing to weaponise trade and should alert the world to a stark reality: digital dependence on the US and how digital infrastructure can become a lever of economic coercion that extends far beyond traditional trade relationships.
The scale of American digital dominance
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 US tech” is accepted as natural.
When infrastructure becomes weapon
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.
The sovereignty challenge
This digital concentration raises fundamental questions about economic autonomy. When essential functions depend on foreigncontrolled 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.
The China exception
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.
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.
The stakes ahead
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 towards sovereignty or accept algorithmic submission.
Professor C. Justin Robinson is Professor of Finance, Pro Vice Chancellor and Principal, University of the West Indies Five Islands Campus.
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