Canada is taking a big step toward digital sovereignty after acquiring an ownership stake in Cohere, a homegrown artificial intelligence company that wants to take on American and Chinese AI giants. “We now have the largest AI company outside the United States and China,” said CEO Aidan Gomez on Thursday, when the federal government announced it was investing up to $1.6 billion in Cohere. “This investment is a vote of confidence in Canada’s ability to build world leading technology, create opportunities here at home and lead one of the most important industries of the future.” The equity stake in the Toronto-based company would mean “affordable, secure, sovereign AI, built in Canada for the benefit of Canadians,” Prime Minister Mark Carney said in a prepared speech at the Canada-EU summit in Montreal on Thursday. According to CB Insights, Cohere has more than 60 investors, including corporations, ventures capital firms and pension funds. Major investors include Germany’s Schwarz Group, NVIDIA, and Bell Ventures. Cohere has a valuation of $36 billion. The company says its client base has grown 20 times over the past year to 300 customers. Its platforms have been adopted by “highly regulated industries such as Aston Martin Aramco, RBC, Japanese IT company Fujitsu and German submarine maker TKMS. Cohere says the government funding will allow it to create 1,000 new Canadian technology jobs. It also plans to invest $4 billion in research and infrastructure construction by the end of 2031. The federal government has not said what percentage of ownership it will gain in Cohere, but the AI minister says the government will now have a say in the future of the company. Evan Solomon says Cohere has committed to keeping its headquarters in Canada despite merging with a German company early this year. “This is a responsible investment done on favourable terms. This will give us a seat at the table,” said Evan Solomon in an interview with CTV’s Power Play. “It will allow the government and companies to keep their sensitive data – Canadians’ data stored here in Canada. (It will stay) here in Canada under Canadian law,” the minister said. In September, Cohere merged with Berlin-based Aleph Alpha, to create the first transatlantic sovereign AI solution that can compete with the likes of OpenAI, Anthropic and China’s DeepSeek. Both the U.S. and China have a history of trying to strong arm Canada and Europe economically through tariffs. Analysts say supporting Cohere provides an alternative to using American and Chinese AI, and reduces the risk of those countries using the technology as leverage. “You could envision something where these models are so powerful, they can use cyber security defensively and offensively,” said Sean Mullin, a senior fellow at Toronto’s Munk School of Global Affairs and Public Policy. “Do we want to have critical parts of our future digital infrastructure run by AI models that are entirely outside of our control?” Mullin says Cohere isn’t going to replace the U.S. tech giants but it’s important for Canada and Europe to have options. Mullin also says many countries in both Europe and Asia are looking to reduce reliance on the U.S and Cohere could be an alternative. Keith Jansa, CEO of the Digital Governance Council says it’s good that Canada recognizes AI as critical infrastructure and wants to develop and commercialize the technology rather than “simply consuming them.” But Jansa told CTV News that Canada needs to do more than just nurture homegrown AI to achieve digital sovereignty. “Even if we develop the models here, that doesn’t necessarily mean we control the infrastructure it runs on, the data it uses, or the conditions under which it operates. So, what matters is whether Canadian businesses, governments, and institutions can choose the technologies they use to control their data and (can) change providers without becoming locked into systems they can’t control.” The government’s plan to further bolster digital sovereignty involves more control in the boardrooms. It has launched a $500 million growth tech fund to be used to invest in small and medium start-ups and acquire more equity stakes
