Regulation of big tech, the global technology giants, faces a number of challenges in Brazil. Last week, the Ministry of Finance presented a study with a proposal for regulation aimed at preventing predatory practices by large platforms, through changes to the Competition Defense Law. Experts say that the measure is only the first step and that there is a consensus that the sector also needs to be well regulated, especially on issues such as content control and taxation.
The issue is sensitive and faces strong resistance from market giants such as Google, Amazon, Apple and Meta (owner of Facebook, Instagram and WhatsApp). "There are many challenges, but some very specific to big techs have to do with the difficulty of providing quick responses to innovative technologies and the resistance of the population itself, which is subject to the negative impacts of an unregulated activity," points out Luiz Fernando Plastino, from Barcellos Tucunduva Advogados.
According to the expert, there are also cases in which the state itself depends on private technologies to function in some sectors, which makes the need for regulation particularly sensitive. A recent study presented by Oxfam demonstrated the size and complexity of this market. The survey pointed out that big tech dominates the markets, 75% of global spending on online advertising is paid to Meta, Alphabet and Amazon, and more than 90% of global online research is done through Google.
The main discussion in relation to the monopoly of the big techs is the regulation of an antitrust law, which aims to ensure that the dominant companies in the market do not bar competition. At first, the economic team proposed establishing additional rules for larger companies, under the command of the Administrative Council for Economic Defense (Cade), which would be the regulatory body. Currently, the country's competition defense institution acts when it identifies a case that violates the balance of markets.
"The main reason for regulation is to reduce the power of companies over users and ensure that they are held responsible for any negative impacts of their activity on people in general. Any activity, when it's too big, has consequences for society and needs rules to avoid getting out of hand," Plastino points out.
The issue of technological monopolies has been discussed by experts since the last decades of the 20th century, but specific signals for the regulation of big tech only began in 2021. The European Union is a benchmark in regulating tech giants, while other countries are also standing out with differentiated standards, such as Canada and India. In the United States, monopolistic practices are being investigated and parliament is debating antitrust legislation.
For the lawyer, starting by attacking competition is the "right" decision. He says that Brazil "has already played a pioneering role in the discussion of rules for the internet, but is still in its infancy when it comes to the specific regulation of platforms". "We need to resume this role and innovate in various areas in order to achieve a consistent and effective framework," Plastino adds.
Taxation
The Organization for Economic Cooperation and Development (OECD) advocates that large multinationals, including big techs, pay a minimum 15% tax on profits in the jurisdictions where they operate. With this, the organization aims to cut incentives for companies that send profits to countries where they enjoy tax advantages.
According to the OECD's calculations, a global minimum tax, which is already in place in some countries, such as South Korea and Japan, could raise up to 200 billion dollars (R$1.1 trillion) in additional revenue per year. Brazil has not yet signaled whether it will follow this rate, nor when it might be implemented.
For Marcelo Costa Censoni Filho, tax lawyer and CEO of Censoni Tecnologia Fiscal e Tributária, it is important to take an approach to taxation that "prevents the erosion of the tax base without compromising innovation". "Participating in multilateral agreements to establish a common tax base is essential to prevent the erosion of the tax base and ensure that big techs pay a fair share of taxes in the countries where they actually generate economic value," says the expert.
The potential revenue from taxing big tech in Brazil will depend on several factors, including the structure of the tax and the rates set. "International studies indicate that taxes on digital services, with rates of around 3% of revenue, can generate substantial revenues. In the case of Brazil, considering the size of our digital market, the collection could reach billions of reais annually. However, a detailed study of the specific economic activities of these companies and an analysis of the capacity to implement and supervise the new tax regime are necessary," he says.
Control
The spread of false information, hate speech and racist or Nazi content on social networks is an issue that has mobilized governments and regulators. For digital law specialist Marcelo Cárgano, coordinator of the Japan Desk at Abe Advogados, controlling content on digital platforms is the biggest impasse. "There is great concern about what can be published on these platforms and who should be held responsible for false or offensive content," he explains.
Cárgano cites the case of X (formerly Twitter), which recently resumed operations in Brazil, as an example of a debate on content control. "It is still necessary to monitor how Brazil will deal with this issue of regulation, especially with regard to freedom of expression and combating harmful content," he says.
Last year, the issue of regulating big tech gained momentum in Brazil with the passing of Bill 2630/2020, the so-called Fake News Bill. The proposal, which aimed to establish new rules for content moderation on digital platforms, also sought to hold companies responsible for illegal content shared by users.
Inspired by the European Union's Digital Services Act, the bill introduced a "duty of care", an obligation to prevent and mitigate crimes such as racism and terrorism, requiring platforms to act more diligently.
The controversy surrounding the bill intensified after the vote on the bill was postponed in the Chamber of Deputies, while the Federal Supreme Court (STF) was preparing to rule on lawsuits questioning the constitutionality of the Marco Civil da Internet. Article 19, for example, exempted platforms from responsibility for content generated by third parties, unless a court decision ordered its removal, a rule that could be changed by the new legislation.
This scenario put the big techs, such as Google and Meta, in a position of resistance, claiming that approval of the proposal would result in an avalanche of lawsuits and compromise freedom of expression. At the same time, the Supreme Court was preparing to hear cases discussing the suspension of apps such as WhatsApp and Telegram due to non-compliance with court orders to break confidentiality in criminal investigations. The Court was also going to assess the validity of Article 19, which limits the liability of platforms.
The big techs claimed that the proposed regulation would turn the platforms into a kind of "internet police", transferring to them a role that traditionally belonged to the judiciary. This would mean that they would have to decide what is "illegal" without a court decision, which they considered inappropriate and potentially harmful.
In addition, both Meta and Telegram warned of the risk of censorship and permanent surveillance that the bill could create, comparing it to control systems in anti-democratic regimes. Meta argued that the bill would transfer the power of moderation to private companies, a function that should be the responsibility of the judiciary.
Freedom
Another important point raised was the impact on freedom of expression. Meta and Google pointed out that the possibility of a "flood of lawsuits" would make the platforms act less in moderating content, making the online environment more unprotected.
Furthermore, with regard to encryption and privacy, the companies defended the maintenance of end-to-end encryption technology, arguing that this was essential to protect users' privacy. They emphasized that "collaborating with the authorities for criminal investigations should not compromise the general privacy of citizens".
Regarding content moderation, Google and other companies recognized the difficulty of dealing with the vast amount of controversial and complex information, even with good moderation policies. Removing content without a court decision was seen as a violation of freedom of expression.
Finally, the big techs defended the constitutionality of article 19 of the Marco Civil da Internet, which limited the platforms' liability for content generated by third parties, emphasizing that they could only be held responsible after a court decision.
Source: Correio Brasiliense