Canada to crack down on foreign investment in digital media sector

OTTAWA (Reuters) – Canada will crack down on foreign investment in the interactive digital media sector to stop state-sponsored actors from endangering national security, Innovation Minister Francois-Philippe Champagne said on Friday.

Starting immediately, Ottawa will increase scrutiny of investments “by entities owned or influenced by foreign states, particularly states that engage in activities that may pose a risk to Canada’s national security”, he said.

The term interactive digital media includes video games and virtual reality devices.

“Hostile state-sponsored or state-influenced actors may try to … spread disinformation and manipulate information,” Champagne said in a statement.

Although he did not identify any particular nation, Canada has repeatedly accused China and Russia of foreign interference. Both countries deny the charges.

Starting now, foreign entities wishing to invest in the sector might have to give stricter undertakings for a longer period of time, particularly with respect to creative independence, corporate governance and transparency, he said.

Factors Ottawa will be looking for when studying proposed foreign investment include the reach and audience of the products’ content, whether the products have online elements and the degree of control or influence the investor would likely exert on the Canadian business.

(Reporting by David Ljunggren; Editing by Sandra Maler)