The trip from Waterloo, Ont. to Ottawa is only five or six hours long, but BlackBerry has a lot of ground to cover once it gets there.
According to federal lobbying documents discovered this week, the troubled smartphone maker has registered to meet with the federal government to discuss the Investment Canada Act. Only the parties involved will know exactly what’s on the agenda, but it’s safe to say it all boils down to this: Is it OK if we sell out to the foreigners?
This is perhaps a more complicated question for BlackBerry than any other Canadian tech firm, and particularly in light of the last couple of years. Though it operates in a completely different sector, BlackBerry’s board must be well aware of what happened when BHP Billiton tried to acquire Potash in 2010. Industry Canada essentially quashed that deal because it was perceived that the takeover did not represent a “net benefit to Canada.” The same thing could happen to BlackBerry unless the transaction is presented in the most politically favourable light.
Let’s be clear: there’s no way BlackBerry is going to ask (or convince) the government to relax the rules. Its meeting with the feds is probably just a smart, proactive tactic to fend off possible objections later. According to Michelle Lally, a partner and chair of the competition law/foreign investment group at Toronto-based law firm Osler, Hoskin & Harcourt, the government will be concerned that losing BlackBerry doesn’t post any kind of strategic or national security risk to the country as a whole.
“It’s going to be scrutinized when you have national icons at stake,” she said. “(RIM) has always been a source of pride across Canada.”
It’s not like we haven’t lost a lot of other major players in the Canadian market before. In fact, there have been some that I’d argue were just as important that passed into foreign hands without so much as a whisper. Consider Cognos, which was bought by IBM several years ago. Cognos made some of the best business intelligence software in the world, and was as deeply deployed within the public sector as any number of BlackBerry models. It just wasn’t a hardware company that could be carried by business leaders and consumers alike.
The “net benefit” test that Industry Canada will consider has a handful of criteria, and it’s worth remembering some of the ones that killed the BHP-Potash deal. The government felt that takeover could have hurt Canada's ability to compete in world markets while also impairing productivity, efficiency and innovation in Canada.
That last one could be the deal-breaker. Just last week the World Economic Forum came out with its annual rankings on competitiveness, and Canada placed 14th for the second year in a row. The Conference Board of Canada released a report to assess the situation, and identified one major problem.
“When it comes to business innovation, Canada is seriously underperforming. Canada actually fell four places in factors related to innovation and business sophistication, and that’s a real concern,” wrote Michael Bloom, the Conference Board’s vice-president of organizational effectiveness and learning. “As a developed country, Canada’s economic competitiveness is largely innovation-driven.”
Saying bye-bye to BlackBerry would hardly seem like a way of improving this situation. As it continues to shed jobs, BlackBerry will need to work hard to demonstrate to Ottawa that no matter who buys the company, there will be an ongoing investment in human capital that will foster innovation and competitiveness across Canada. Is that too much to ask of a smartphone firm that’s facing financial turmoil? Maybe, but when you become an icon, you’re supposed to represent something important. It will be up to the government to decide just how important BlackBerry still is.