Brazil’s Lula Launches Full-Scale Assault on American Tech

Lula da Silva’s Brazil is moving forward with plans to drastically expand the powers of its market competition watchdog, the Administrative Council for Economic Defense (CADE). Last Wednesday, Brazilian President Lula da Silva introduced alongside his Finance Minister, new legislation transforming Brazil’s regulatory architecture from its current reactive regulatory framework to a more proactive, “ex-ante” regulatory regime that would have free rein to target American companies operating in Brazil.

Brazil’s latest regulatory push is the culmination of years of growing protectionist sentiment. A proposal similar to the one introduced earlier this week was originally drafted in late 2022. While failing to gain traction at the time, a 2024 proposal for expanding tech regulations from the Ministry of Finance helped the issue to regain traction with Brazilian lawmakers. Now, with trade tensions flaring, it seems Lula da Silva views expanding the regulatory powers of CADE—which plays a similar role to the U.S.’s FTC—as a means of raising barriers to the, until now, prosperous U.S.-Brazil digital trade.

If empowered, Brazilian regulators would actively scrutinize American businesses, launching targeted investigations justified through language intentionally left vague and difficult to comply with. The bill’s primary regulatory mechanism is granting CADE the ability to unilaterally designate digital platforms as “systematically relevant”, subjecting a handful of companies to elevated regulatory scrutiny, special transparency and data handling obligations, preemptive regulatory action, and expanded mandatory reporting procedures. 

Unfortunately for American companies operating in the region, the revenue thresholds arbitrarily set by Brazilian lawmakers exclusively qualify U.S. tech firms. This artificially disadvantages U.S. competitiveness, disproportionately saddling American companies with harsh burdens while sparing domestic and foreign competitors. 

What’s worse, Brazilian regulators have historically demonstrated targeted discrimination against American companies. Justified through the guise of promoting competition, overly burdensome regulations have caused headaches for international business and a deterioration of the consumer experience.

Companies such as Apple have long faced regulatory barriers in Brazil. In 2024, when Brazilian judges ruled against social media platform X’s moderation practices without justification, millions of Brazilian users were barred from accessing the platform for a five-week period. Just last month, CADE called for punitive actions against Apple for its distribution of digital services. Under a proactive “ex-ante” regulatory regime, CADE would be empowered to pursue even more extreme action, further risking abuse of American businesses in Brazil.

These discriminatory actions haven’t gone unnoticed in Washington: the U.S. Trade Representative launched a Section 301 trade investigation in July, examining Brazil’s digital trade policies. Brazil has since issued a “strong rejection” of the investigation’s basis, defending the tax policy changes and content moderation requirements that initially motivated U.S. action. Brazil’s continued regulatory overreach will undoubtedly expand the scope of the 301 investigation, risking an escalation of reciprocal measures.

Brazil’s regulatory path continues to mirror a similar push for greater scrutiny of American tech companies in Europe. A number of European countries enforce discriminatory policies including digital service taxes, content quotas, and anti-monopoly laws. These policies are often constructed using arbitrary thresholds to artificially capture American companies, extracting profits from America’s most profitable industries. 

Digital regulations remain a significant barrier to American enterprise across the globe. Policies such as Brazil’s regulatory reform further a dangerous trend of discriminatory, targeted policymaking that has continued to proliferate across jurisdictions. In order to protect American business and ensure that competition and innovation prevail, the U.S. must take action to address growing barriers to trade, whether physical or digital.