Pedro Henrique Ramos, senior partner of b/luz, on the opportunities available in the Brazilian TMT market
The evolution of law practice in media, technology, and data protection in Brazil is marked by a long and winding road, sparked mainly by changes in the economic and international landscape.
In the 2000s, social networks like Orkut and Facebook brought questions about limitations of liability, freedom of expression, and cyber crimes that challenged the Brazilian legal framework at that time. Complex business arrangements required a new bunch of technology agreements. Broadband got not only interconnections and regulatory stuff but also net neutrality.
Regulation answered. Brazil experienced a new regulatory era with the Marco Civil da Internet, a law designed to increase legal certainty, acknowledge that digital businesses need to be plural and diverse, and rely on an open environment where freedom of business models would also be a core principle.
‘The enthusiastic years of seeing the internet as a social development tool were suddenly forgotten as a “techlash” emerged.’
Nonetheless, in the last five years, the international landscape deeply affected how Brazilian regulators perceived the internet. The enthusiastic years of seeing the internet as a social development tool were suddenly (and to some extent unfairly) forgotten as a ‘techlash’ emerged, with critiques of the platform economy, data businesses, financial technologies, and mobility solutions. Most of those concerns were reasonable and significant. Others were part of overarching movements related to a geoeconomic agenda, such as the GDPR.
Brazil follows the trend
In 2018, we pushed for the approval of LGPD (General Data Protection Law), our ‘Brazilian GDPR’, a somewhat tropicalised version of its European sibling, enthusiastically promoted by several stakeholders but lacking a critical understanding of its regulatory costs and unintended consequences. In the same year, CVM (Brazilian Security and Exchange Commission) and the Brazilian Central Bank started to regulate several actors from the fintech and cryptocurrency ecosystems.
Regulations for e-hailing services popped out from everywhere on a national and municipal level, creating even more challenges for new entrants. The pandemic has also spurred sectorial, and self-regulation initiatives in education and health services primarily focused on addressing public welfare to a remote and ubiquitous reality. Most recently, new judicial precedents revisiting intermediary liability also have been challenging companies.
Perspectives for 2023
On 30 October, centre-left candidate Luiz Inácio Lula da Silva won the Brazilian elections after the most polarising campaign in the country’s history.
An unpredictable race destabilised the economy for months before the result. This political uncertainty, unstable commodity prices, post-pandemic inflation, and rising interest rates contributed to a year almost to be forgotten for the Latin America technology and innovation sector.
But this is not a sad, gloomy scenario. Against all odds, Brazil’s innovation ecosystem is climbing up the valley. Venture capital firms injected US$5.4bn in Latin America in the first half of 2022. Though the volume is lower than in 2021 (US$6.7bn), it is well above the result for 2020 (US$1.5bn) and better distributed (541 companies in 2022 vs 377 companies in 2021). 52% of all these transactions are from Brazil.
Innovations in finance are also promoting radical changes in the country. With fintech competing at the same level as traditional banks, an official instant payment platform created by Brazilian Central Bank (PIX), the country currently has one of the highest rates of electronic payments, with cash transfers corresponding to less than 3% of the amounts in circulation.
2023 will be a relevant and indispensable moment toward a more mature and sustainable industry. There will be no need to build things from scratch as our ecosystem and the regulatory framework are well established. The new government led by Mr Silva is also promising that it will not create barriers but spur investments in the area, with guiding policies focused on digital inclusion, green technologies, and entrepreneurship. Let’s hope for this.
Facing the challenges
‘Brazil is not for amateurs.’ This is a common phrase in business and law practice since regulation, politics, and culture are so mixed in the country that some things are difficult to explain to a foreigner. The emerging complex rules for technology in Brazil require even more expertise and responsibility.
Law firms in Brazil have been expanding their services to include new practices and squads. Some are brand new, such as technology transactions, privacy and data protection, and tech regulation. Some blended with traditional practices, like fintech and digital assets, startups and venture capital, and digital media and entertainment. Litigation practices are also changing – the internet impacted competition, strategic, and high-volume litigation.
‘2023 will be a relevant and indispensable moment toward a more mature and sustainable industry.’
It is now a sea of opportunities. But a genuinely modern, innovative, tech-oriented law firm must meet the demands of a fast-paced, increasingly globalised environment, with an aggressive integration with other practices in a full-service-approach law firm. A deep understanding of technology and business issues will be crucial for clients, especially for emerging techy fields such as fintech, digital media, video on demand, gig economy, health tech, internet infrastructure, and urban mobility.
Practising at the top of our game requires courage and creativity. Lawyers must be business executives and razor-sharp legal professionals, balancing deal-making with risk prevention. To be a tech lawyer at the sexiest moment in this industry also means to get rid of any definitions, nouns, and categories, at the risk of making the same mistakes that excessive practice division led traditional lawyers to make.
Clients demand an integrated, business-oriented, and solution-based lawyer, and the state of the industry in Brazil provides a unique opportunity for professionals to be, once again, innovative in our field.
Author
Pedro Henrique Ramos
Senior partner at b/luz, head of the media, technology and data protection practices.
Email: pedro@baptistaluz.com.br
About b/luz
Backed by an experienced team with outstanding academic and professional know-how, b/luz is Brazil’s full-service legal powerhouse for innovative, cutting-edge, tech-based businesses. With 200+ partners and associates, b/luz focuses on media, technology, and innovation sectors, as well as large companies that engage us to help with their digital challenges. We are proud to work with more than half of the Brazilian unicorn startups and, simultaneously, with more than 30 public companies, mainly from media and tech sectors. Find out more at baptistaluz.com.br/en/
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