Brazil Must Not Follow the EU’s Lead on Legislation like the DMA

As the global digital economy becomes increasingly interconnected, Brazil faces a pivotal choice. Its National Congress is currently considering a "motion for urgency" to fast-track Bill 4.675/2025-the "Fair Digital Competition Bill"-which is a proposal that would impose sweeping obligations on large digital platforms.

While SIIA shares the goal of ensuring competitive and fair markets, rushing to adopt a rigid, European-style regulatory model without robust stakeholder consultation threatens digital innovation and would place Brazil on a collision course with the U.S. at a delicate moment for trade relations between the two countries.

The core problem with the Fair Digital Competition Bill is its shift toward ex ante regulation. Instead of a traditional competition law approach-punishing firms if they abuse their market power-this proposal would preemptively impose significant burdens on successful companies largely because of their size. Its designation of "Systemically Relevant Economic Actors" is based on revenue thresholds that are so high that they seem tailored to target large U.S. tech companies, such as Amazon, Google, and Meta.

This regulatory approach, which borrows heavily from the EU's Digital Markets Act, is ill-suited for an emerging digital economy like Brazil's. It threatens to replace market dynamics with government micromanagement and, in addition to its impact on the firms it directly targets, will have substantial downstream consequences for the thousands of domestic businesses that rely on integrated digital services provided by foreign companies. The global software industry is built on interoperability, the seamless flow of data, and the ability to bundle tools that help small enterprises scale. By importing a DMA-like model, Brazil risks creating a fragmented regulatory environment. This fragmentation would not just hurt foreign tech companies; it would also harm Brazilian software developers, fintechs, and educators who rely on stable, global standards to deliver their services.

Look no further than to the evidence from where the "DMA model" has been tried. As we noted in October, the EU's ex ante experiment is already showing cracks. Far from a silver bullet, the DMA is harming consumers, competition, and innovation in real-time. Early implementation has forced platforms to degrade widely used features, break helpful integrations, and introduce friction that frustrates users. Other countries should recognize these flaws for what they are: warning signs, not a roadmap. For an emerging digital powerhouse like Brazil, the priority should be fostering an environment that accelerates digital adoption and innovation, not one that erects artificial barriers.

And herein lies a more immediate risk. The U.S. and Brazilian governments are currently engaged in crucial conversations aimed at deepening economic integration and lowering trade barriers. These talks are vital for Brazil's economic recovery and its desire to attract foreign direct investment. Passing legislation that targets some of the "crown jewels" of the American innovation economy would be precisely the wrong signal to send at this time. If Brazil were to threaten U.S. companies with exorbitant fines for ill-defined conduct, the U.S. would see that not as domestic competition policy, but as digital protectionism, which would invite trade friction and likely retaliatory measures.

The Brazilian competition enforcement agency, CADE, is highly respected internationally and has shown itself more than capable of handling complex cases using existing laws. There is also no market failure that would justify bypassing the standard legislative process. If Brazil wants to improve its digital economy, it should focus on establishing a predictable regulatory environment for all businesses, rather than penalizing success.