Recent reports have pointed to how the meteoric emergence of superstar digital firms such as Google or Amazon has coincided with trends across several economic indicators that show competition declining in a variety of markets. Commentators are increasingly arguing that these phenomena, which appear particularly pronounced in the digital economy, are interlinked and are likely impacting global innovation in a negative way.

We examine the evidence for this argument and evaluate the threats to innovation posed by declining competition, both present and potential. We identify a series of recent phenomena that are impeding competition and harming innovation, and highlight a number of potential threats to the competitive landscape.

These developments, we find, are likely to have negative impacts on Canada – if left unaddressed. But government and civil society actors in Canada can still take action to improve competition in the digital economy. We set out 26 policy recommendations that would help counter these impacts, looking at Canada’s data regime, algorithmic regulation, amendments to Canada’s Competition Act and related legislation, and government capacity.

Canada should stop simply following the leader. Instead, it should recognize where the puck is going – and get there first.

View PDF