The federal government has introduced new policies aimed at better protecting Canada’s interactive digital media industry from foreign investments that could pose threats to national security. Innovation Minister Francois-Philippe Champagne stated that investments in the sector by entities owned or influenced by foreign states engaging in activities that may risk Canada’s national security will be subject to enhanced scrutiny.
The statement provides additional guidance on how the Investment Canada Act applies in the sector, which includes businesses involved in digital entertainment and educational applications like video games and extended reality. Ottawa expressed concerns about hostile state-sponsored actors using foreign investments to spread disinformation and manipulate information.
The term interactive digital media refers to digital content or environments allowing users to participate or interact in activities online or via gaming consoles. In a new policy, the government provided factors to assess potential harmful investments in the sector. These include evaluating the reach and audience of the product’s content, the investor’s ties to a foreign government, and the potential use of the Canadian business for spreading disinformation.
Another policy lists factors to determine if a proposed investment would benefit Canada. Reviews for investments in businesses creating original intellectual property in the sector may require stricter undertakings, according to Mr. Champagne. The government has identified China, Russia, and Iran as significant threats to national security and intellectual property.
A list of Named Research Organizations in these countries identified over 100 universities and entities recognized for ties to military or state security. Canadian researchers partnering with these institutions in sensitive research areas would be ineligible for government funding. Ottawa still welcomes foreign direct investments in the interactive digital media sector and aims to work with businesses to find partnerships in Canada’s best interest.