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Tech Roundup, May 1, 2020 | Brazil’s tech market still waiting for Covid-19 push

. May 01, 2020
Tech Roundup, May 1, 2020 | Brazil's tech market still waiting for Covid-19 push Image: Emojoez/Shutterstock

You’re reading The Brazilian Report’s weekly tech roundup, a digest of the most important news on technology and innovation in Brazil. This week’s topics: Brazilian companies’ over-reliance on offline work. Data privacy on the Supreme Court. And more.

More dependant on the offline world, Brazilian tech companies suffer

With around 4 billion people across the world currently living under some form of lockdown, tech giants are experiencing a boom in business during the Covid-19 pandemic.

From all-online services such as Netflix, Zoom, or Facebook to e-commerce moguls such as Amazon, big players are experiencing a boom in valuation — despite the jittery state of markets. Here is how some of these companies&#8217; stocks have performed since March 11, when the World Health Organization declared a pandemic:</p> <ul><li><strong>Facebook Inc:</strong> +20 percent (USD 204.71 per share)</li><li><strong>Amazon.com Inc: </strong>+36 percent (USD 2,474.00)</li><li><strong>Netflix Inc:</strong> +20 percent (USD 419.85)</li></ul> <p><strong>Not here. </strong>The trend, however, has not spread to Brazil, according to a study conducted by the Itaú BBA bank. &#8220;Brazil&#8217;s tech companies still depend too heavily on the offline part of business,&#8221; said Enrico Trotta, a technology analyst at the bank, <a href="https://neofeed.com.br/">told</a> the website <em>NeoFeed</em>.</p> <ul><li>The Brazilian management software company Linx is a good example of this. Highly dependent on retail customers, Linx shares have crashed 32-percent since the coronavirus reached Brazil. The same has happened to Totvs, Brazil&#8217;s leading Enterprise Resource Planning software producer, which has experienced a 22-percent slide.</li></ul> <p><strong>Why it matters.</strong> Unlike more developed economies, Brazil will likely see a very slow recovery from the pandemic. Moreover, it could reduce the appetite of venture capitalists to bet on Brazilian startups.</p> <p><strong>Other reasons.</strong> The fall of companies&#8217; market capitalization is not entirely in their offline-dependent business models. Brazil&#8217;s neverending political instability is also to blame, with a lack of coordination between the federal government and state administrations making the Covid-19 fight all the more difficult.</p> <p><strong>Scrambling.</strong> Gympass, a marketplace offering gym services for employees of over 2,000 companies, saw <a href="https://brazilian.report/coronavirus-brazil-live-blog/2020/04/09/amid-pandemic-brazilian-companies-laying-off-workers-remotely/">its business model halted</a> as states entered quarantine. But the unicorn (that is, a <a href="https://brazilian.report/tech/2019/08/02/softbank-uber-banco-inter-investments/">startup valued over USD 1 billion</a>) has fast-tracked the launch of its new <a href="https://revistapegn.globo.com/Startups/noticia/2020/03/coronavirus-gympass-lanca-plataforma-online-para-academias-continuarem-aulas.html">online platform</a> for fitness classes.</p> <p><strong>Winners.</strong> Locaweb, a leader in web hosting services in Brazil, and Arco, an ed-tech listed on Nasdaq, are positive exceptions to the trend observed by Itaú BBA. With entirely online services, they have experienced a valuation of 37 and 15 percent in 2020, respectively.&nbsp;</p> <hr class="wp-block-separator"/> <h2>Data Protection Law in uncertain territory</h2> <p>President Jair Bolsonaro has signed a provisional decree further postponing the enactment of the General Data Protection Law in Brazil. The new rules on data privacy were initially scheduled to be enforced in August 2020 — but the Senate <a href="https://brazilian.report/tech/2020/04/04/impact-postponing-brazil-data-protection-law/">postponed it to January 2021</a>. Now, Mr. Bolsonaro has pushed the date back even further, to May 3, 2021.</p> <p><strong>Important.</strong> In the meantime, an important debate on the future of data privacy will be heard next week before the Supreme Court. The 11 justices will decide whether or not Brazil&#8217;s official statistics agency can access Brazilians&#8217; personal data (such as names, phone numbers, and addresses) from telecommunications companies.</p> <ul><li>Last week, Justice Rosa Weber temporarily suspended the sharing of data until a final decision is taken. She acted at the request of the Brazilian Bar Association —&nbsp;which highlighted the risk to clients&#8217; privacy.</li><li>The government says that the data will be exclusively used for socio-economic phone surveys —&nbsp;as the pandemic has made the traditional in-person interviews impossible. To the Supreme Court, the Solicitor General&#8217;s Office stressed the government will observe the obligation of ensuring the security and secrecy of all data.</li></ul> <p><strong>Why it matters.</strong> The Supreme Court&#8217;s decision will be key to setting the limits of data privacy in Brazilian law.</p> <p><strong>Data blackout.</strong> With in-person surveys halted, official agencies <em>do </em>need a way to talk to people in order to measure the impacts of the Covid-19 crisis on people&#8217;s livelihoods. So far, the country has flown blind in several aspects, including unemployment data. The Brazilian Institute of Geography and Statistics managed to carry out just 60 percent of the 70,000 employment-related interviews it had planned for March, and a measly 35 percent in April — against a pre-coronavirus average of 90 percent.</p> <p><strong>But, but, but.</strong> The government has proven to be <a href="https://brazilian.report/newsletters/brazil-weekly/2019/06/15/sensitive-data-breaches-brazil/">less than reliable with data security</a> in the past —&nbsp;from officials using unsafe devices to deal with sensitive information to an investigation into the Federal Data Processing Service (Serpro), a state-owned IT processing firm, for allegedly <a href="https://brazilian.report/power/2018/06/07/brazil-personal-data-breach/">selling the personal data of Brazilian citizens</a> without their consent.</p> <hr class="wp-block-separator"/> <h2>Take note</h2> <ul><li><strong>Remote work.</strong> A <a href="https://valor.globo.com/carreira/noticia/2020/05/01/funcionarios-desejam-continuar-no-home-office-apos-pandemia-diz-estudo.ghtml">study</a> by the Dom Cabral Foundation, in partnership with the consultancy firm Grant Thornton, shows that 54 percent of Brazilian professionals currently in remote work would like to continue working from home even after the coronavirus threat is gone. Roughly 40 percent believe their productivity levels haven&#8217;t dropped. Moreover, the remote work reality has raised companies’ awareness around data protection issues.&nbsp;</li><li><strong>Security.</strong> The pandemic has also proved a perfect opportunity for online scammers. The number of phishing attacks in Brazil has <a href="https://cryptoid.com.br/pesquisas-seguranca-da-informacao-e-ciberseguranca/brasil-bate-novo-recorde-no-numero-de-ataques-de-phishing-ja-no-primeiro-trimestre-de-2020/">broken new records</a>, with 11,000 successful attempts being recorded. The numbers come from Brazil&#8217;s Online Criminal Activity report by the tech company Axur. Since February, over 135,000 new website domains have been registered containing the terms &#8220;coronavirus,&#8221; &#8220;covid,&#8221; or &#8220;vaccine.&#8221; A significant portion of them, however, are malicious ––&nbsp;being only meant for scams or other illicit activity.

 
Gustavo Ribeiro

An award-winning journalist, Gustavo has extensive experience covering Brazilian politics and international affairs. He has been featured across Brazilian and French media outlets and founded The Brazilian Report in 2017. He holds a master’s degree in Political Science and Latin American studies from Panthéon-Sorbonne University in Paris.

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