Google lawsuit in U.S. could affect operations in Brazil

. Oct 21, 2020
google lawsuit doj brazil regulation Photo: Jane0606/Shutterstock

This newsletter is for PREMIUM subscribers only. Become one now!

While Google takes heat in the U.S., Brazilian regulators have their own cases against the tech giant. Worst pandemic effects to be felt in 2021. Brazil offered financial incentives to block Huawei.

The cases against Google in Brazil

The U.S. Department of Justice sued Google on Tuesday, claiming that the tech giant has illegally protected its monopoly over search and search advertising. Among the anti-competitive practices attributed to Google is paying billions of dollars to phone and computer manufacturers in order to be the default search option on their devices.

While the U.S. government’s move is arguably the most significant challenge to the power of a tech behemoth in a generation, it is by no means the only one. In Brazil, Google is answering three lawsuits in Brazil’s antitrust watchdog Cade — many of them reflecting worldwide disputes.

</p> <ul><li><strong>Search engine.</strong> In 2016, review platform Yelp filed a <a href="">300-page complaint</a> accusing Google of hurting its business model through its &#8220;ability to tamper search results to favor its own products.&#8221;</li><li><strong>Android.</strong> Also in 2016, Google was accused of strong-arming smartphone manufacturers to use its search engine as a default option. The issue is part of the DOJ&#8217;s lawsuit against the company and motivated the European Union to slap a EUR 4.3-billion fine on the firm.</li><li><strong>Scraping.</strong> Cade began investigating in 2019 if Google is illegally using proprietary content of news outlets on its Google News service. As a sort of antidote, Google announced this year it will initiate a <a href="">licensing program</a> with major outlets.</li></ul> <p><strong>Dismissed lawsuits.</strong> Last year, Cade shelved two lawsuits against Google: one concerning alleged abusive contract clauses for ads in its AdWords service, and another by Buscapé, a tool that helps consumers find better deals for products. Regulators claim there is a lack of evidence that the big tech firm&#8217;s conduct is detrimental to Brazilian consumers. Without precedent from abroad — from the EU and the U.S., in particular — it is hard to imagine Google being severely punished in Brazil.</p> <p><strong>Justice Ministry.</strong> Besides Cade, Google faces an investigation by the Justice Ministry, which looks into possible data collection from underage YouTube users without the explicit consent of parents.&nbsp;</p> <hr class="wp-block-separator"/> <h2>When the pandemic effects will be felt</h2> <p>An estimate by researchers at think tank Fundação Getulio Vargas draws a grim picture for Brazil next year. In 2021, when workers will no longer receive the coronavirus emergency salary, one-third of Brazilians could be living with less than half of the minimum wage — that is, less than USD 93 per month.</p> <ul><li>Moreover, one economist has estimated a hidden unemployment rate of 40 percent among low-income populations. That is because millions of people have simply stopped looking for jobs, meaning that they are not counted as being part of the workforce by traditional standards.</li></ul> <p><strong>Why it matters.</strong> The data suggests that the emergency aid has not avoided a situation of economic chaos, but rather postponed it.</p> <ul><li>The government is torn between the economic team, which defends fiscal austerity, and its more political wing, which calls for a flexibilization of the federal spending cap to pay for social policies.</li></ul> <p><strong>Projections.</strong> Moreover, the Brazilian economy could be devastated by a possible second wave of the virus. A group of economists has suggested that high Covid-19 mortality rates are also associated with bigger GDP slumps.</p> <ul><li>The data is far from being perfect —&nbsp;as underreporting of coronavirus infections means that mortality rates are not 100-percent accurate, and other factors play into the GDP equation. Still, economists say it is possible there is correlation between the two indicators.</li></ul> <div class="flourish-embed flourish-scatter" data-src="visualisation/4084703" data-url="" aria-label=""><script src=""></script></div> <hr class="wp-block-separator"/> <h2>U.S. offers Brazil funds to ignore Huawei</h2> <p>The U.S. government stepped up its efforts to lure Brazil into banning Chinese telecom giant Huawei from its incipient 5G market. On Tuesday, officials of the U.S. International Development Finance Corporation, the U.S. EXIM bank, and the National Security Council offered to finance purchases by Brazilian telecom operators of equipment, providing it is bought from Huawei&#8217;s competitors.</p> <p><strong>Bolsonaro on Huawei. </strong>President Jair Bolsonaro has said that he will personally make the final decision about where Brazil stands on Huawei. But there are signs that the president could be leaning towards a ban. Besides recently upping his anti-China positions, Mr. Bolsonaro told cabinet members that he wants even closer relations with the Donald Trump White House, as one senior aide to the president told our Brasília correspondent Débora Álvares.&nbsp;</p> <ul><li>Mr. Bolsonaro even told staffers he will attend Mr. Trump&#8217;s second inauguration, though the incumbent U.S. president trails in polls for the November 3 election.</li></ul> <p><strong>Meanwhile … </strong>Huawei sees Brazil as a key strategic market and is rushing to ink deals with local companies and state governments. The strategy is to make a ban too costly and ensure that the worst-case scenario for the company is a compromise.&nbsp;</p> <ul><li>As <strong>The Brazilian Report</strong> showed last year, the Chinese company already <a href="">controls a large part of Brazil&#8217;s telecom infrastructure</a>, having built roughly 70,000 of the country’s 86,000 operational radio antennas.</li></ul> <p><strong>Why it matters.</strong> Brazil is in the middle of a tug of war between its two main trading partners — and not using that position to get the best deal it can from each side.</p> <div class="flourish-embed flourish-map" data-src="visualisation/3335585" data-url="" aria-label=""><script src=""></script></div> <hr class="wp-block-separator"/> <h2>What else you need to know today</h2> <ul><li><strong>Coronavirus. </strong>Health Minister Eduardo Pazuello has cleared his entire schedule for the week, after developing a fever and other flu-like symptoms. Mr. Pazuello has gone into self-isolation and awaits the results of a Covid-19 test.</li><li><strong>Vaccine.</strong> Carla Zambelli and Luiz Philippe de Orléans e Bragança — two members of Congress linked to President Bolsonaro — presented a bill to end mandatory vaccination in Brazil. As the law stands, people cannot access a variety of public services if their children do not have up-to-date vaccination certificates, and parents also risk losing custody of their kids. The bill comes as Mr. Bolsonaro tries to spread the idea that a coronavirus vaccine shouldn&#8217;t be imposed on people (our <a href="">Explaining Brazil podcast</a> will dig deeper on that issue later today).</li><li><strong>1-million club.</strong> Argentina has become the fifth country in the world to top the mark of 1 million coronavirus cases — alongside the U.S., India, Brazil, and Russia. What is remarkable about the Argentinian case is that the country went into lockdown before many European countries, and still enforces some restrictions on its population. But massive inequalities and an informal economy which forces people to leave their homes <a href="">undermined government efforts to contain the pandemic</a>.</li><li><strong>Gas deals.</strong> Bolivian President-elect Luis Arce told newspaper Folha de S.Paulo that he will renegotiate gas contracts between his country and Brazil. Mr. Arce says terms were set by the &#8220;illegitimate government&#8221; of Jeanine Áñez, who took office after a <a href="">coup in 2019</a> that was supported by Brazilian diplomacy. </li><li><strong>Emergency aid.</strong> The São Paulo City Council started discussions toward creating a <a href="">cash-transfer program for vulnerable populations</a> in Brazil&#8217;s biggest city. The project unites traditional foes in Brazilian politics: the Workers&#8217; Party, a traditional defender of social policies, and the Social Democracy Party (PSDB), of Mayor Bruno Covas. So far, parties have agreed on a three-month BRL 100 (USD 18) stipend. Mr. Covas has been accused of pulling the move to facilitate his re-election bid in November.</li><li><strong>Supreme Court 1. </strong>Today, the Senate&#8217;s Constitution and Justice Committee will hold its confirmation hearing for Kássio Nunes Marques, appointed by President Jair Bolsonaro to <a href="">fill the vacancy on the Supreme Court</a>. These affairs are usually perfunctory: we will learn little about how Mr. Nunes Marques will act in the Supreme Court, and the majority to approve his appointment has already been negotiated beforehand.</li><li><strong>Supreme Court 2.</strong> Justice Alexandre de Moraes was randomly assigned as the rapporteur of the criminal investigation into President Jair Bolsonaro&#8217;s alleged illegal interference with the Federal Police. This is the fourth inquiry <a href="">impacting the president in the hands of Justice Moraes</a>.</li><li><strong>Senator Underpants.</strong> As revealed by Brasília correspondent Débora Álvares, the Brazilian Senate found a way to protect one of its members from punishment. Caught by the Federal Police with a hefty amount of embezzled cash stashed &#8220;between his buttocks,&#8221; Chico Rodrigues (who became known by the unflattering moniker &#8220;Senator Underpants&#8221;) took a 121-day leave of absence — which essentially <a href="">nullifies the Supreme Court decision</a> to suspend him from office. In a video to his colleagues, Mr. Rodrigues said he hid the money inside his briefs to &#8220;protect the wages of people who work for him,&#8221; and asked senators not to judge him too swiftly. He will be temporarily replaced in the Senate by his son.

Read the full story NOW!

Our content is protected by copyright. Want to republish The Brazilian Report? Email us at