Industry Committee on Jan. 31st, 2024

[Prof. Nicolas Papernot]

That's correct.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you very much.

[The Chair, Liberal, Joël Lightbound]

Thank you, Professor Papernot and Mr. Garon.

Mr. Masse, you have the floor.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

I'll start with our online guests first to get them involved in the conversation, Mr. Clement first and then Ms. Bednar.

Mr. Clement, you mentioned the number of meetings, 223 meetings, being with the business sector. One of the things brought up that I think is an interesting question was by Mr. Gaheer, and it was on the algorithms. I'm wondering, with only focusing consultations with the companies.... We've seen at this committee in the past, whether it be gas pricing, where there's vertical integration in the industry, where there's no real competition because refining is all done by a select group of corporations. In fact, you have some brand name gas that has basically moved from market to market. We've seen as well, too, specifically bread price fixing. We've also had the Competition Bureau in on that. We've even seen the CEOs admit to us they didn't even have to collude to get rid of hero pay for grocery store retailer staff. They got rid of it all on the same day. Miraculously they came to the same conclusion.

The question I have specifically is: Is there a potential, I guess through the private sector, to create algorithms that actually also reduce further competition? You don't even have to have collusion if you have a lack of competition, which we have in many markets in Canada.

I'll start with Mr. Clement on the concerns about more algorithms being used to define the Canadian marketplace against consumers.

[Prof. Andrew Clement]

Let's start with the big ones, particularly in the context of AI. There are only three or four companies at this point that have the financial and technical means to develop large language models, so you've already started off with a very highly concentrated market before you go much further. There might be competition amongst some of the adaptations of that, but that is the way the industry is going generally.

Of course it's very complicated. There are lots of things going on, but we're certainly in a position where the few large actors—think of Amazon—just have so much market power that they can shape markets to their interest.

I hope that answers your question.

[Brian Masse, NDP, Windsor West, ON]

It does. It's something that I touched on through some correspondence and reading and that I don't think has gotten a lot of attention.

I'll go to Ms. Bednar with regard to the AI commissioner.

I'll give the minister credit. There have been some changes to the Competition Bureau. There has been some increased funding over the previous government by this government. There were some modest changes, but we still have a long way to go, in my opinion, to protect consumers.

On the AI commissioner, I'm wondering how we keep the AI commissioner in the game as artificial intelligence expands its horizons and, on top of that, for them to have the right tools and the right enforcement powers. That's what I'm really worried about, that we will have a commissioner who doesn't have the strength and doesn't have the budget to deal with some of the complications we get.

[Vass Bednar]

I share that concern that they may not be empowered enough or have the tools they need and that we want them to have.

I also want to say that a lot of the dangers we're talking about are exacerbated during these periods of regulatory lag where, during these periods, new business techniques that the laws are ambiguous on become the new normal. With algorithms negotiating with suppliers or setting prices, as this becomes a new normal, it's going to be harder for the state to have legitimacy to, say, renegotiate or to finally identify this behaviour as something that can be a concern.

I think there's a natural tension to have the AI work happening within ISED, and as we see some of this tension play out similarly on the competition side, Canadians would benefit from this individual having a stronger, more independent mandate, as well as a more independent voice.

Those are some quick thoughts. I know that others have made more substantive suggestions to this committee in that regard.

[Brian Masse, NDP, Windsor West, ON]

That's very helpful. I appreciate it.

I'm going to move to Mr. Papernot with regard to having new enforcement in the private sector.

You mentioned how the funding for AI research has not kept pace. In a part of this bill, should we have a consideration almost like proceeds of crime, where conduct that results in that maybe goes to fund research for AI, specifically to address the problems we might face?

As you know, there are a lot of good things. We're focusing on the negative right now, but at the same time, I'm wondering how we keep up on the private sector. If there are problems, how do we fund solving those problems without it just going back onto the public?

[Prof. Nicolas Papernot]

It's a bit out of my expertise, and I don't want to do you a disservice by trying to figure out where the funds should come from. What I will say is that we do need a lot more funding if we want to sustain the AI talent pipeline that will be needed to enforce this, even if you just think about public employees who will need the right expertise to evaluate the claims that are being made about these AI systems. Right now, we are not going to be producing enough AI talent in Canada if the universities don't have more funding to support that work.

[Brian Masse, NDP, Windsor West, ON]

I'm probably out of time, but really quickly, if there is that support from the Canadian public to actually fund that AI research and so forth, would that put a better sense of responsibility on AI companies to perform properly as to the conduct of the public if that training and that support are provided to give them the workforce that's necessary? Perhaps that would give us a bit of a carrot-and-stick approach to ethical AI.

[Prof. Nicolas Papernot]

Yes. I think that the more clarity this bill brings, the more it's likely that it will support the AI systems and the AI ecosystem in Canada.

I know that we have lots of private sector sponsors at the Vector Institute. One of the things they've mentioned to us is that they want more clarity, because they're often smaller structures. They see a lot of penalties being described in the bill, but they want to be able to continue innovating in Canada and not be attracted to other countries that have that clarity in terms of how to manage that risk in the longer term.

[Brian Masse, NDP, Windsor West, ON]

Thank you.

Thank you, Mr. Chair.

[The Chair, Liberal, Joël Lightbound]

Thank you, MP Masse.

Before we start the second round, colleagues, I have to get to the House to support and speak to a bill. As such, I would ask unanimous consent to designate Brian Masse as our acting chair for the remainder of the meeting, if you don't mind.

[Some hon. members]

Agreed.

[The Chair, Liberal, Joël Lightbound]

I see that I have unanimous consent. I leave you in the capable hands of MP Masse.

I'll yield the floor to Mr. Williams for five minutes.

[Ryan Williams, Conservative, Bay of Quinte, ON]

Thank you, Mr. Chair.

Thank you to our witnesses.

Ms. Bednar, it's nice to see you again. Thank you for coming to the committee.

I want to talk about two things with you, expanding on competition. One is that there were amendments—and I don't know if you've seen them—from the minister that expanded the scope of the bill. One of them was to add general-purpose definitions for AI in the act. What I'm really looking at is whether this is making this uncompetitive.

My second question is that we had a witness at a previous meeting, Todd Bailey, who told the committee that there's a deliberate tactic by entrenched businesses to create regulatory capture, locking in a regulatory module around their business and products and keeping out new competitors.

Can you comment on both of those items as they relate to competition?

[Vass Bednar]

In terms of our being uncompetitive if we move forward with this legislation, there's a moment of competition in terms of policy design here. I think that, in the future, we should expect to see more policy harmonization or diffusion in the privacy space. What we're seeing now is kind of this global federalist context where different jurisdictions, for a variety of reasons and in their various geopolitical contexts, as MP Rempel was pointing to, are putting forward very particular frameworks. In Canada, our federalism is typically a strength for our policy design. The worst thing we could do now is treat public policy as if we still carve it in stone. This is going to be a living document that we should be looking at, updating and upgrading, especially as this technology continues to improve.

I'll go back to the consent element that we were just touching on. I mean, when the largest firms are saying that they're entitled to anything on the public web to inform their models and their business decisions, how can any firm compete with that kind of policy?

Finally, let's not treat privacy as if it's under-regulated or unregulated in our digital economy. The digital economy is highly regulated, mostly by private actors.

The regulatory capture element is always a concern in policy design if we're overlistening to certain actors, of course. However, as real as the problem of regulatory capture can be, I like to believe in my heart of hearts that all actors coming forward with ideas and concerns are doing so in the best possible spirit.

I hope that's helpful for you.

[Ryan Williams, Conservative, Bay of Quinte, ON]

Thank you, Ms. Bednar.

Mr. Chair, I'm going to cede the rest of my time to Mr. Généreux.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Thank you to my colleague and to the witnesses.

Professor Clement and Professor Papernot, you may not have followed all the testimony since the beginning of this study, but a number of people have talked about consultations.

Professor Clement, you said that the minister had conducted about 300 consultations, but only with businesses. A number of people have told us that this bill was not well written, particularly because there had been no prior broader consultation. Can you confirm that I understood correctly what you said about that?

[Prof. Andrew Clement]

Yes.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Professor Papernot, do you share that opinion?

[Prof. Nicolas Papernot]

Consultations will need to continue once the act is in force to understand the challenges of implementing it in line with technologies and their evolution over time.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Yes, I understand.

The other point that has been raised a number of times is that the act has two complementary and completely separate components: artificial intelligence, and everything to do with privacy. So there are links to be made between the two.

On the other hand, as you mentioned, we have to adapt to new AI technologies, which are evolving rapidly, as well as to the regulations put in place in Europe, the United States and around the world.

Most of the experts who have come to testify, as you have, since the study of this bill began, have told us that there should have been consultations much earlier and that, in light of those consultations, those two elements would probably not have been combined in the same bill.

Today, however, we're studying a bill that contains two elements that most people feel should be separated. Do you also believe that they should be separated, that AI is an extremely important element that should be dealt with independently, and that there should be much broader consultations than what has been done so far?

[Prof. Nicolas Papernot]

I agree that AI is one way to analyze data, but there are many other ways to do it. So we need regulations on privacy, just as we do for AI. For the latter, the part of Bill C‑27 that deals with it talks a lot about privacy, but there are a lot of other ways to—

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

That's the most important thing.