Silicon Valley looks north as tech giants expand in T.O.
Not all Canadians thrilled about U.S. operations in the city
Silicon Valley is invading Toronto.
Intel Corp. has announced plans to build a graphics-chip design lab in Canada’s largest city. Car-hailing service Uber Technologies Inc. will be opening an engineering hub. Google’s parent, Alphabet Inc., proposed building a new Toronto campus as part of a sensor-laden “smart city” on the Lake Ontario waterfront, and Microsoft Corp. said it would expand its Canadian workforce by more than 20 per cent.
There has been so much activity that Silicon Valley Bank, the Santa Clara, Calif., financier for some of the world’s largest venture-capital firms and startups, opened an office here in March after19 years of handling Canadian business from Seattle and Boston.
“There’s a hell of a lot more going on up here than we appreciated,” said Win Bear, head of business development for Silicon Valley Bank’s Canada operation.
Technology companies are hiring more workers in Toronto, attracted by the region’s diverse population of 6.4 million, a deep pool of skilled labour and cultural similarities to major U.S. cities such as San Francisco, New York and Chicago.
North America’s fourth-largest city is also cheaper: Its computer engineers and programmers earn salaries that are on average $71,000 a year lower than their counterparts in San Francisco, according to recruiting platform Hired Inc. By hiring in Toronto, companies can get around the Trump administration’s tough immigration rules that have made it more difficult to hire foreign workers in the U.S.
Toronto is benefiting from Canada’s fast-track visa program and a universal health-care system that lowers companies’ costs of providing employee benefits.
Those attributes helped propel Toronto to the final round of Amazon.com Inc.’s search for a second headquarters, the only non-U.S. city to make the cut. Though Toronto lost the bid, Amazon still opened a 113,000-square-foot office in the downtown core in December and
said it would hire 600 new employees. The links between San Francisco and Toronto have grown so tight that airlines added 139 flights between the cities in the past two years, even as they cut the total number of flights between Canada and the U.S., according to travel data provider OAG.
Many Canadians are wary of the influx. Some worry about the invasion of Big Tech, while others say U.S. businesses are crowding out domestic companies and siphoning some of the country’s most valuable intellectual assets.
“We are squandering our future,” said Jim Balsillie, former co-chief executive of BlackBerry Ltd., whose smartphones were once ubiquitous. Canada isn’t benefiting from recent innovations local researchers have made in artificial intelligence, voice and image recognition and self-driving automobiles because they are employed by foreign companies that own the intellectual property, Mr. Balsillie said.
Patent lawyer Jim Hinton said foreign companies own about 70 per cent of the roughly 1,600 AI and machine-learning patents filed by Canadians at the U.S. Patent and Trademark Office since 2015. Those concerns haven’t stopped Canada’s top officials from inviting big U.S. companies north. Last year, Justin Trudeau became the first Canadian prime minister to visit San Francisco in more than 70 years. During his visit, Salesforce.com Inc. said it would invest $2 billion in Canada over the next five years.
It isn’t clear how much of that sum Salesforce has invested already, and company representatives didn’t respond to requests for comment.
AppDirect, a company that develops online stores for business-software applications, committed to hiring 300 people as part of a Canadian expansion. A spokeswoman said it is on track to hire at least 60 people in Canada since Mr. Trudeau’s visit and expects to accelerate that pace in the coming years. Those investments helped boost foreign investment in Canada’s information and communications technology industries by 21 per cent between 2017 and 2018, compared with a three per cent decline a year earlier, according to Statistics Canada.
Privacy concerns are worrying some Canadians. A recent proposal by Google affiliate Sidewalk Labs to build a city “from the internet up” on Toronto’s waterfront has become a flashpoint for critics concerned about how the company would handle data collected by sensors embedded throughout the planned neighbourhood.
Resident Julie Beddoes supports a volunteer-led group that is opposing the Sidewalk project. She also said that companies like Google are following a pattern that is familiar in Canada, where large U.S. companies come north and push out smaller, domestic firms.
“I’m concerned the big bulldozing megacorporations coming in will make it harder for our younger people to start their own companies,” she said.
Sabrina Geremia, head of Google’s Canadian business operations, said the company employs more than 400 people in Toronto and roughly 1,200 in Canada, serving as an anchor tenant that attracts engineers and developers to the city. Many of those arrivals help expand the broader tech community by joining other companies or launching their own, she said.
“We grow talent and export talent,” Ms. Geremia said. “Not everyone stays at Google.”
The Mountain View, Calif., company has demonstrated its commitment to Toronto’s technology community by contributing five million Canadian dollars (US$3.8 million) to the Vector Institute, an independent AI research group housed at the University of Toronto, she added.
For all the international investment, Canada still lacks companies with the size and influence of big U.S. firms that could champion their home country.
Harley Finkelstein, chief operating officer of e-commerce company Shopify Inc., said Canada’s economy was being hamstrung by having too few domestic giants.
Ottawa-based Shopify has a roughly $40 billion market capitalization on the New York Stock Exchange, making it the largest Canadian tech company. Mr. Finkelstein said that staying in Canada allowed Shopify to grow without competing for engineers in the Bay Area. He hopes other Canadians make the same choice.
“While I appreciate that any new job for Canadians is a good thing, a headquartered Canadian company is far better than any branch office,” Mr. Finkelstein said.