Bloomberg News

Brazil House Passes Internet Bill as Rousseff Drops Data Demand

March 25, 2014

A law for Internet rights passed the lower house of Brazil’s Congress last night, advancing the bill after President Dilma Rousseff ended a six-month standoff by giving up on a measure she said would protect Brazilians from spying.

The removal of a requirement for companies to host data from Brazilian users within the country’s borders was a win for Google Inc. (GOOG:US) and Facebook Inc., which had lobbied against the provision. Rules preventing Internet service providers from favoring some types of Web traffic over others were left intact, despite resistance from phone carriers such as Oi SA and Telefonica Brasil SA.

The bill makes Brazil the leader among large countries in upholding the principle of net neutrality, in which providers must grant equal access to the entire Internet, without selectively blocking or slowing down services. With Brazil weeks away from hosting an international Internet conference, Rousseff chose to let the law advance, even with weaker provisions for the country’s oversight of its citizens’ data.

“Brazil is a giant country, and passage of this law will provide a model for implementing net neutrality as a policy measure in other major markets,” Katherine Maher, advocacy director for international digital rights organization Access, said by phone from Washington before the vote.

Net Neutrality

The proposal was approved by all except one political party yesterday and still requires the upper house’s vote and Rousseff’s signature. If it passes, Brazil would join Chile, the Netherlands and Slovenia as countries that have enacted net neutrality laws, according to Raegan McDonald, European policy manager at Access.

In exchange for withdrawing the data-center proposal, Rousseff’s government asked to strengthen language in the bill calling for companies operating there to obey the country’s laws and make data available to law enforcement.

Marco Civil standardizes the way companies operating in Brazil must respond to legal requests, said Dennys Antonialli, coordinator of the Internet, Law and Society Nucleus at the University of Sao Paulo. The consequences for noncompliance include 10 percent of the company’s revenue earned in Brazil the year prior to the offense.

Rousseff had requested the data-center measure after documents leaked in September by former U.S. contractor Edward Snowden alleged that the National Security Agency was spying on her digital communication and on state companies such as Petroleo Brasileiro SA. The measures could lead to a “Balkanization” of the Web, said Tim Karr, strategy director for Free Press, a digital advocacy group.

‘Dangerous Precedent’

“You would have these walled areas of information, which sets a dangerous precedent,” Karr said by telephone. “A similar model has taken root in other countries like Iran.”

Every month, 92 percent of Brazilian Internet users visit Google sites, according to ComScore Inc. The country is the third-largest market for Google’s Android smartphone software.

Internet trade associations and the International Chamber of Commerce sent an open letter to the Brazilian Congress in October, saying that the data-center proposal would hurt the country’s competitiveness, increase the cost of doing business, lead to slower growth and make Brazilian Internet users more vulnerable to hacking.

Rousseff stood by her proposal. In September, she pushed Congress to act by marking the Internet bill as urgent, a procedure that forces lawmakers to vote on the measure before they can decide on any other legislation. The move paralyzed the lower house as the president struggled to gain support for the data-center measure before finally relenting.

Google, Facebook

Google, Facebook (FB:US) and other Internet companies continue to grapple with the response of countries around the world to allegations of U.S. spying. The European Union is set to vote April 3 on its own overhaul of data-protection rules, first proposed in September. Internet governance was a common goal expressed at the Brazil-EU summit last month.

German Chancellor Angela Merkel, who allegedly was also an NSA spying target, said in a February podcast that companies such as Google and Facebook are set up in places with the least data protection, “and that’s something we can’t endorse in the long run in Europe.”

Legally Responsible

In another victory for Google and Facebook, the bill approved yesterday in Brazil preserves protection against intermediary responsibility, which means Internet companies can’t be held legally responsible for material on their websites. Companies can only be prosecuted, for example, in cases of libel, if “after a judicial order, it does not take every measure technically possible within a given deadline” to remove “content found to violate laws,” according to the text of the legislation.

Brazil is scheduled to host an international conference on Internet governance in Sao Paulo beginning April 23, in part as a follow-up to the “international Marco Civil” Rousseff proposed in her speech at the United Nations in September. The European Commission endorses the conference as a response to U.S. stewardship of the Internet.

“It’s definitely on the agenda for Internet freedom advocates organizing on a global scale,” Karr said. “They’re very much aware of what’s going on in Brazil.”

To contact the reporter on this story: Anna Edgerton in Brasilia at aedgerton@bloomberg.net

To contact the editors responsible for this story: Helder Marinho at hmarinho@bloomberg.net Crayton Harrison, John Lear


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