TORONTO — Shopify will fight the Canada Revenue Agency’s attempt to secure data about the commerce company’s Canadian merchants, said COO Kaz Nejatian, describing the request as “outrageous.” 

“I think it’s outrageous for the government to—without a court order, without any law—backchannel a tech company and say, ‘Give me all the data for all the citizens of my country,’” he said Monday during an appearance at The Logic Summit in Toronto. The agency has not accused any of the merchants who would be affected of any wrongdoing, he noted. 

Nejatian was echoing the words of Shopify CEO Tobi Lütke, who tweeted on Friday that the CRA had asked the company to “backchannel them [six] years of records for all Canadian Shopify stores,” and declared, “We will fight this.”

Public records show the federal agency filed an application in April under the Income Tax Act with the Federal Court, citing a section allowing it to seek a court order requiring a third party to turn over information needed to fulfill its tax-collection duties. The law allows it to do so even if every person that would end up in the dataset isn’t identified, and the agency has won such orders in the past against Toronto-based Coinsquare, a crypto-trading platform, and PayPal, among others.

Shopify has generally maintained friendly relations with Ottawa as it has grown into Canada’s most prominent tech export. Lütke chaired the digital technology economic strategy table for then-innovation minister Navdeep Bains, and during the pandemic the firm proposed that the federal government fund a program to get small businesses online using its platform. It also offered to help on COVID-19 relief measures.

Nejatian, named COO in September, is also vice-president of product for Shopify’s merchant-services business, which brings in the bulk of its revenues from sources like payment-processing charges and fees for cash advances. The firm has steadily expanded its platform over the years, adding new offerings to attract ever-larger brands and retailers while launching services for ever more aspects of their clients’ operations. 

“It’s going to cost us lots of money to fight the government,” noted Nejatian. But the firm’s continuing stance sends a signal to merchants that it will resist the CRA’s bid to access merchant data. 

The company has also retrenched parts of its operations. Last month, it offloaded its logistics business to San Francisco-based Flexport, in which it already held a stake. Shopify had by then spent more than US$2.5 billion to acquire fulfillment platform Deliverr and robotics firm 6 River Systems for the division, and budgeted at least US$1 billion more to build out a warehouse network. Between the divestiture and layoffs, Shopify cut 20 per cent of its workforce, less than a year after a 10 per cent reduction.

Exiting logistics to partner with Flexport “wasn’t unusual for Shopify, as a move,” Netjatian said, noting it had begun work on payments and installment businesses before getting out of them to work instead with Stripe and Affirm, respectively. “Our job is to make these things exist on the internet, not to build them ourselves.” (Affirm CEO Max Levchin was to take the stage at the Summit later Monday afternoon.)

Stock analysts have looked to some of these new services to drive revenue growth, especially ones like logistics that have the potential to increase Shopify’s cut of merchants’ orders. Nejatian said the firm’s leadership isn’t focused on the share price or the public markets. “We spend a lot of time working on helping merchants connect with their customers,” he said, citing the platform’s marketing, advertising and customer-acquisition tools. “We’re spending a lot of time helping them manage their money. We’ve spent a lot of time helping developers build the next generation of software on the internet.”

The firm recently launched Audiences, a customer-finder tool, and Balance, a small-business banking account, while expanding investments in app makers who build tools for its platform.