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OTTAWA — In May 2020, two months after the World Health Organization declared COVID-19 a pandemic, executives from Shopify approached federal officials with an idea: if the government covered their salaries, the company would hire and train up to 1,000 young people to help the country’s small businesses survive lockdowns by selling online, using Shopify’s platform.

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While the program didn’t go ahead as pitched, it marked one of a growing number of behind-the-scenes exchanges of ideas between the government and the Ottawa-founded commerce company, whose logo adorns two office towers within blocks of Parliament Hill.

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“Shopify is a really good, constructive partner,” said a senior government official, who requested anonymity because they were not authorized to speak publicly. “They bring a lot of different proposals to government [and] almost all of them are good-quality, well-thought-out ideas.”

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Shopify is Canada’s most valuable public tech company, and successive federal innovation ministers have singled it out for praise, saying they hoped their policies would foster more companies like it. For all that, it has shown relatively little interest in influencing government policy in its home country. It employs a single lobbyist in Ottawa and since October 2017 Shopify representatives have communicated with government officials on just 40 occasions, according to the federal lobbying registry. Amazon, by contrast, logged 129 communications in 2021 alone.

Since the onset of the pandemic, however, the company has sought to work more closely with government, especially on programs aimed at small business, digital workforce development and pandemic relief; 32 of those lobbying registry entries have come since March 2020.

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The May 2020 pitch was among them. Shopify executives—including on at least one occasion Toby Shannan, now chief operating officer—presented their idea for the program across a series of meetings with officials from Innovation, Science and Economic Development Canada (ISED) and Employment and Social Development Canada. 

According to company decks that The Logic obtained via access-to-information request, Shopify proposed hiring between 500 and 1,000 young people for the summer who would help small businesses sell online using its platform. It would put them through four weeks of “intensive e-commerce training,” and offer a 90-day free trial to any Canadian small business wanting to set up a Shopify store, with the summer workers available to help them do it. 

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Shopify sought up to $20 million in federal funding to cover compensation costs for the new recruits. The firm promised to cover the workers’ equipment expenses, and to open-source the educational materials it created for the program so unsuccessful applicants could learn digital skills on their own.

Shopify’s pitch emphasized its corporate contributions to Canada, estimating its total economic impact in 2018 at US$1.29 billion in gross domestic product and US$366 million in tax revenue, including direct and indirect impacts as well as its induced effects. 

“In short, the Canadian government would be helping a Canadian company hire Canadian students to help Canadian small businesses move to e-commerce,” said one of its decks.

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Ottawa opted not to back the company’s proposal. Instead, it moved forward with a program the government official said was already under development internally—what they called a “main street restart package” including funding and support to get businesses online. In the April 2021 federal budget, the Liberals allocated $4 billion over four years for the Canada Digital Adoption Program (CDAP). The scheme offers grants for e-commerce setup costs, subsidies for digital advice and student work placements, as well as interest-free loans for larger technology expenses. It began accepting applications in March.

According to the official, the government did consult Shopify on the design of some parts of CDAP, such as establishing a roster of digital advisors that participating firms could consult. 

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“Shopify and the Government of Canada did not form a partnership to hire students to help digitize small businesses,” said company spokesperson Rebecca Feigelson via email. “We are pleased however to see some of our recommendations reflected in [the CDAP] and will do what we can to support that program’s participating partners.” The company ended up offering the free 90-day trial in Canada and all its international markets.

On at least one other occasion the company has proposed a government program that would have increased its Canadian merchant base. In the summer of 2019, it pitched officials at ISED on a “voucher-like program that would encourage small businesses to use the Shopify platform,” according to a memo Global Affairs Canada’s international business investment and innovation sector prepared for Ng ahead of a March 2020 meeting with Shopify president Harley Finkelstein and Clark Rabbior, now the firm’s head of Canadian and multilateral government affairs. Under the scheme, the government would have reimbursed participating firms for 70 per cent of their annual software subscription. Feigelsohn said no such partnership was established.

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Shopify has offered advice and assistance to the government unrelated to its own business interests, particularly during the pandemic. Lots of its proposals “aren’t looking for funding for various Shopify-type of things,” said the official. 

In April 2020, the firm told Ottawa it could help deliver the Canada Emergency Response Benefit (CERB), a $2,000-a-month payment for workers who’d lost income due to COVID-19. Fiegelsohn said Shopify had offered free “technical and engineering expertise” on technology that could “manage a large number of requests at one time without having a system failure, similar to a retail flash sale.” The Canada Revenue Agency ultimately administered CERB.

In June 2020, the federal and Ontario governments announced COVID Alert, an exposure notification app based on code from a team of volunteers at Shopify. The company loaned some developers to the Canadian Digital Service to continue work on the system before its launch. 

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Global Affairs Canada has also sought Shopify’s views on the measures it should pursue in World Trade Organization-led negotiations on e-commerce, departmental documents show.   

And some of the company’s top executives have previously served in government-appointed roles. CEO Tobi Lütke chaired the digital-industries economic strategy table, a group ISED established to provide recommendations on policies and programs. Finkelstein sat on the board of directors of CBC/Radio-Canada from December 2017 to May 2020. 

While Rabbior is Shopify’s only lobbyist in Canada, according to its federal registration, the company is ramping up its lobbying in the U.S. and Europe, hiring government affairs staff with experience at major Silicon Valley firms.

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Shopify has lobbied U.S. and European lawmakers on anti-trust legislation, but hasn’t publicly participated in the ongoing debate around updating Canadian competition rules. “There’s an opportunity for Canada to be a policy maker instead of a -taker” on digital and platform issues, said Vass Bednar, executive director of McMaster University’s graduate public policy program. “I’d be excited to see more direct and explicit engagement on these policy files from Shopify in Canada.”

Shopify did not make Rabbior available for an interview for this story. 

For all its exchanges with the government, Shopify has never received direct federal funding, according to government disclosures. It has benefited from other programs designed to help Canadian firms.

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Export Development Canada (EDC), a Crown corporation, insures cash advances to merchants in Canada, the U.K. and U.S. under the company’s Shopify Capital program, as well as the loans it offers in the U.S. “Shopify is a dynamic and globally minded Canadian exporter and a national tech champion,” said EDC spokesperson Victoria Marcantonio, noting that the agency’s support is “an opportunity to support their international growth as well as the small business customers they serve.” 

EDC declined to disclose terms of the agreement, citing commercial confidentiality. EDC sought Shopify’s approval before responding to The Logic’s questions about the relationship.

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