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A to Z on Internet Policy and Regulation – Brazil 2022

Time has come again, another year of general elections in Brazil.

Some 30,000 candidates are running for Executive and Legislative seats: 1 President, 27 State Governors, 27 Federal Senators, 513 Federal Deputies, 1059 State Deputies, 24 District Deputies to govern 212+ million people and one of the largest economies in the world.

For a few lucky industries, success and failure do not correlate with who is in power; for others, policy and regulation are everyday business.

Those who take the front seat in the public agenda, liaise with competitors, hire outside counsel, lead from abroad, influence on stealth mode or consciously free-ride someone else’s strategy are aware that it pays to be informed.

This is the A to Z list on what is at stake in Brazil for Internet & Technology in 2022.

Artificial Intelligence

  • In 2021, the Chamber of Deputies (lower house) approved a bill that sets definitions, goals, principles, fundamentals, and soft guidelines for AI in Brazil. Tech representatives and industry coalitions are pushing the initiative forward. The ball is at the Senate’s court now.

Broadband

  • The telecom regulator updated its quality-of-service requirements, and will be monitoring the performance of broadband providers throughout the year.
  • The measures will inform three quality indexes and lead to the awarding of seals of quality to the best providers in 2023.

Crypto Assets

  • Transactions and gains with crypto assets are to be reported to the Treasury. That aside, it is all a blur.
  • Regulators and legislators from both houses are engaged in learning more about the ecosystem and their drafts suggest policymakers’ willingness to regulate exchanges, impose specific AML requirements, promote transparency, establish a national network of supervisory authorities, and cooperate internationally.

Digital Identity

  • Brazil leapfrogs e-gov rankings and consistently performs high in online banking standings. Part of the success is credited to digital identity
  • management solutions adopted by the government and the financial industry.
  • Decentralized identity projects are the noticeable next step.

Entrepreneurship

  • Billions are being poured into unicorns and early-stage startups via venture capital or M&A. Public-private startup programs abound. The pipeline shall not dry up.
  • Congress will readdress tax incentives for angel investors, whereas federal and state regulators are designing sandbox programs to prompt innovation; but STEM education and science & technology funds to bridge the valley of death are to be reinvented through governance and smart (public) money.
  • Hopefully a handful of candidates might raise awareness to the matter to promote a proper environment for innovative entrepreneurship.

Fake News

  • Maybe the most notorious Internet-related public policy issue throughout the current four-year political cycle, a permanent front-pager.
  • Several committees and task forces in the three branches struggle to find balance and clarity on how to promote free speech and truth.
  • A bill in Congress and leading cases in the Judiciary will impact elections and the businesses of many tech companies. There are signs that specific messaging services could eventually be banned from operating in the country.

Gaming & Gambling

  • The market for online sports betting, state lotteries, e-sports, fantasy sports, casinos is booming. Legal, illegal, semi-legal, semi-illegal, it is simply too big, too messy and too profitable to be ignored by governments and private firms.
  • We live in a political conundrum, where all hands are tied, due to the complex relationship among (i) incumbents and new entrants, (ii) traditional and emerging verticals, (iii) online and brick-and-mortar businesses, (iv) 5570 municipalities, 26 states, 1 Federal District and the Union competing for new revenue streams.
  • The three branches are in, at the three levels of this federative republic. Public tenders, omnibus and sectorial gaming bills, and draft ancillary regulations are all over.
  • In the meantime, the drafts encompass licensing, marketing campaigns, responsible gaming, taxation, compliance, identity management, profit remittance, standard-setting, affiliates, certification, sports integrity, payments, geolocation, and restriction on domain names registration to licensed operators only.

Human Rights

  • Brazil scored 64/100 in Freedom House’s Freedom on The Net 2021 report; against its peak 69/100, in 2018. Notably, the country has been given a “partly free” status in the ranking since its debut in 2016.
  • The organization assesses Brazil performs poorly as per 2/3 categories: limits on content and violation of user rights.
  • Whereas the organization correlates the performance to the president-in-office, he argues that social media platforms deny freedom of speech rights to his affiliates, allies and supporters.
  • After a failed attempt last year, the president is inclined to promote more legislation to regulate bigtech’s content removal policies.

Intellectual Property

  • Government agencies and intellectual property (IP) rights owners are pressuring ecommerce companies to tighten their policies against counterfeit products and other forms of IP violation.
  • Some marketplaces decided to join government guidelines and initiatives to promote best practices to combat piracy.
  • Others stand still under the argument that retailers shall not be held accountable for its users adds, following precedents that intermediaries are exempted from liability.

Jurisdiction

  • There is no sign that law enforcement agencies and the highest courts will retreat from expanding their jurisdictional reach online. Elections are the perfect test zone.

Know-Your-Client

  • Financial intelligence agencies are observing and acting to fight money laundering in online industries.
  • Emerging online gambling and crypto industries are being stimulated to adopt fierce compliance procedures, such as know-your-client, know-your-supplier and know-your-partner.
  • Upon the inexistence of formal sectorial guidelines and standards, analogies and self-regulation shall arise. Operators should think of mimicking other regulated industries and mirroring foreign regulations.

Labor

  • The Brazilian unemployment rate fluctuates around the 13% margin, meaning 13+ million people are unemployed.
  • This adds tremendous pressure on the government’s economic team, the parliament and the judiciary, who consider reviewing Brazilian labor law and court decisions on the significance of the sharing economy, gig economy or platform economy.
  • The most prominent debate surrounds labor unions and public calls for food-delivery and mobility-as-a-service apps to improve welfare policies for more than a million partner drivers.

Multistakeholder and Multilateral Governance

  • The relationship among the United Nations (UN) and multistakeholder institutions is less stressful than it has been.
  • Brazil will be hosting rounds of preparatory meetings that can offer a glimpse of the country’s positioning before multilateral and multistakeholder fora, including the several UN bodies’ world conferences to be held in 2022.
  • A bill in Congress could broaden the Brazilian Internet Steering Committee’s (CGI.br) mandate, adding supervising practices to combat disinformation on social media and messaging apps to the multistakeholder body’s responsibilities.

Neutral host networks

  • Operators are experimenting with the deployment of neutral wholesale optical fiber network projects, open to telcos and internet service providers who would lease capacity from independent operators.
  • The telecommunications regulator is favorable to this approach, but warns that it will monitor how the market evolves in terms of competition and whether ancillary regulations should be adapted to the rising model.

Open Finance

  • After successfully unleashing open banking and instant payment solutions, the country moves towards an open finance ecosystem.
  • The ongoing regulatory and technology updates will enable more data sharing and will allow for the emergence of new services, such as insurance, investment and brokerage products being offered via profiling and cross-references.

Privacy

  • The national data protection framework is still under construction, after 18 months of entry into force of the law.
  • The data protection authority has approved specific guidelines and regulations on: (i) Supervisory Proceedings and Administrative Proceedings; (ii) Application of the General Data Protection Law for Micro and Small enterprises, startups, innovative companies; (iii) Processing of Personal Data by the Government.
  • The authority is to issue its regulations on lawfulness of processing personal data, rights of the data subject, data protection officers, transfers of personal data to third countries or international organizations.
  • Due to several security incidents in recent years, there is a concern about data security in the public sector. The Brazilian data protection authority is promoting new guidelines for security incident reporting by the government itself.
  • A technical cooperation agreement was signed between the data protection and the competition authorities and can evolve into public policies for the digital economy.

Qatar 2022

  • Brazilian politics has an intricate relationship with FIFA’s soccer world cup: the games usually precede the elections, and can influence the humor of the nation, something candidates and marketers explore in their campaigns. Qatar 2022 inaugurates the rare occasion of games taking place after the elections.
  • FIFA did not grant exclusive digital rights coverage to any media company in the country. The organization is expected to experiment with bigtech streaming platforms. Fierce competition for the audience can lead to new business and legal settlements in the national media ecosystem.

Radio Spectrum

  • 5G spectrum has been auctioned, operators are working on the rollout, devices and equipment are continuously being certified.
  • Spectrum rules for TV White Space and WiFi6E are secured.
  • Regulations on the Use of Radio Spectrum (RUE) are now under revision, with a focus on dynamic spectrum management, shared spectrum access, secondary markets for spectrum trading.

Security

  • Senate has recently approved the Brazilian accession to the Budapest Convention on Cybercrime, after years of political mood variation towards the treaty.
  • Regulators are implementing cybersecurity rules and moving from soft law to hard law enforcement in multiple critical infrastructure sectors: telecom, energy, banking, aviation, government, emergency services.
  • Critical communication projects are open for public-private partnerships to build a high security wireless network for government usage and a radiocommunication system for public safety and defense. Terms and conditions are under scrutiny of supervisory agencies and interested stakeholders.

Taxation

  • Macro tax reforms bills aside, the taxation of digital services is being debated in Congress and the Executive, partially inspired by the Organization for Economic Cooperation and Development (OECD)‘s Base Erosion and Profit Shifting (BEPS) initiative, partially provoked by competitors, partially due to the government’s desperate need for new cash to finance public spending.

Unmanned Aerial Vehicles

  • The aviation regulator just granted an UAV operator the first national license for package delivery. It enables commercial cargo drones to fly beyond visual line of sight (BVLOS) routes. A foodtech is part of the project.
  • The drone model was certified to deliver payloads up to 2.5 kg within a 3-km radius in urban areas, conditioned to following safety guidelines as per electromagnetic interference, not flying over people, weather conditions, maximum and minimum heights.
  • Should the technology massify, other regulators, city planning departments and civil society are expected to lean in.

Vaccines

  • Online platforms and media companies play pivotal roles in vaccine communication and emerging public health matters. Their responsibility will only grow in handling misinformation and promoting truth.
  • Many online platforms had to pick sides during the COVID-19 pandemics, and will be challenged and flattered throughout the election year.

Watchdogs

  • ANATEL – National Telecommunications Agency (telecommunications)
  • ANPD – National Data Protection Authority (data protection)
  • BCB – Central Bank of Brazil (monetary policy)
  • CADE – Administrative Council for Economic Defense (competition)
  • CNCP/MJSP – National Council for Combating Piracy at the Ministry of Justice and Public Security (intellectual property)
  • CVM – Securities and Exchange Commission (securities)
  • GSI/PR – President’s Institutional Security Cabinet (national security)
  • RFB/ME – Special Department of Federal Revenue of Brazil (revenue service)
  • SENACOM/MJSP – National Consumer Secretariat at the Ministry of Justice and Public Security (consumer protection)
  • TSE – Superior Elections Court (elections) ... this entry deserves an A-to-Z list of its own.

Xenophobia

  • Online xenophobic discourse increased at alarming rates during the pandemics.
  • At the U.S. Summit for Democracy, the Brazilian President affirmed the internet should be free and stated his government would double its efforts to fight xenophobia.

Youth

  • Generations Z and Alpha are reinventing content production and consumption. Again.
  • Policymakers are pressuring companies to promote more tools and engagement towards privacy, safety, age verification and content management.
  • A high-level government official recently associated kids’ exposure to video-focused social networking services and teenage pregnancy.

Zero-Carbon

  • COP-26 exposed companies and countries’ policies and action towards sustainability and the environment. The Brazilian government pledged to cut 50% national emissions by 2030 and reach carbon neutrality by 2050.
  • Recent studies raised public awareness about the carbon footprint of the Internet and the tech industry.
  • A 2021 bill in the lower house enables the Brazilian carbon trade exchange, and policymakers are a step away from calling the tech industry out to demonstrate its commitment to climate matters.

In 2022, good luck to all candidates, companies, citizens, and the Internet itself.

By Sergio Garcia Alves, Tech Lawyer - Brazil

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