DIGITAL LIFE
Economic regulation of big tech encourages innovation, protects consumers, and doesn't restrict content, argues finance secretary of Brazil
The Executive Secretary of the Ministry of Finance, Dario Durigan, states that the economic regulation bill for big tech, submitted this Wednesday by the Lula administration to Congress, aims to adapt competition protection mechanisms to the "unprecedented role" that big tech has gained in the economy and does not impose any content restrictions.
"This proposal is not about content moderation. This is fundamental. We are not addressing any restrictions, obstacles, or content criteria. We are addressing economic regulation, the structure and conduct of the business model that companies currently adopt," he said in an interview with GLOBO (a newspaper in Brazil).
In Durigan's assessment, the government's decision to abandon the social media content moderation bill creates the conditions for rules to increase competition to be well received in Parliament.
Regarding content, the Finance Minister's number 2 states that the Federal Supreme Court (STF) has already reached a resolution to expand the responsibility for removing posts with illicit content and also to improve the protection of children and adolescents, with the law sanctioned this Wednesday.
"The government chose not to submit any proposals now that address content moderation or corporate liability, especially since this is a recent debate in the country, which has been resolved by the Supreme Court. So I think this is an important first step toward advancing an economic agenda that mobilizes less of the country's ideologies."
Furthermore, Durigan believes that the bill to regulate big tech will be well received by lawmakers because the proposal, along with the provisional measure (MP) that addresses incentives for the data center industry, is part of the country's development agenda.
In general terms, the bill gives more power to the Administrative Council for Economic Defense (CADE) to establish prior regulation for companies deemed "systemically relevant" to prevent abuses. Currently, the country's antitrust authority only acts when it identifies a case that undermines market equilibrium.
According to the proposal, Cade will gain a digital markets oversight body responsible for determining which platforms will be subject to prior antitrust mechanisms. This selection will be made according to qualitative and quantitative criteria established by law, such as a significant number of users, offering multiple services, and access to a significant volume of data.
Objectively, only companies that have recorded, in their most recent financial statements, annual global gross revenue exceeding R$50 billion or annual gross revenue in Brazil exceeding R$5 billion—a criterion known as the "safe harbor" criterion—will be subject to specific regulation.
5 to 10 platforms...It is estimated that 5 to 10 platforms operating in Brazil may initially meet the established criteria. According to the criteria, Meta, Google, Amazon, Microsoft, Apple, Mercado Livre, and iFood could be affected by the measure.
Durigan emphasizes that big tech has gained an "unprecedented role" in the global economy, acting as intermediaries between various actors, whether between companies or consumers. This role is notable for its scale of operation, which provides competitive advantages, such as the data obtained through intermediation within the platform and the possibility of segmentation.
"All of this has transformed the economy, and we need to recognize this, ensuring that these platforms play a very prominent role. This is the economic diagnosis that needs to be recognized, and it's not just a recognition of Brazil, it's a recognition of the world."
According to the secretary, current competition mechanisms lack the tools to deal with this new reality, and the project's objective is precisely to make this adjustment. He emphasized that, unlike European regulations, the obligations for the selected companies will not be rigid, but rather defined on a case-by-case basis, considering the area of operation, for example.
The expectation is that, by promoting competition, the project will increase innovation and protect consumers and companies that are vulnerable to the power of big tech. Durigan cited examples of mobile app stores and exclusive food app contracts with restaurants, both of which increase costs for businesses and end consumers.
Durigan also emphasized that the initiative is not related to recent debates with the United States.
"This has nothing to do with the United States. Some of the companies we anticipate, in some way, due to their size and relevance, are Chinese and Brazilian. So, there's no nationality bias; there's a technical, economic bias, and a focus on enhancing the Brazilian market. That's the main point."
Datacenters...The provisional measure to encourage the datacenter industry aims not only to promote the sector's growth in Brazil but also to increase the country's digital sovereignty at a time of heightened tension in relations with the United States. Part of the space in datacenters will have to be reserved for Brazilian data.
"Our diagnosis is that we need to strengthen our digital sovereignty, including data sovereignty and data territoriality."
The initiative anticipates the effects of tax reform on the sector, with a tax break of R$5.2 billion in 2026. Private investment is expected to reach R$2 trillion over 10 years.
mundophone
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