Brazil Should Avoid Rushing Into DMA-Style Regulation

In the latest chapter of the spread of European-style digital markets regulation to the Global South, a request in the Brazilian legislature seeks to advance a bill that would institute new ex ante competition rules for digital markets. The spread of fast-follower regulations modeled after the EU’s Digital Markets Act (DMA) and the United Kingdom’s Digital Markets, Competition, and Consumers Act (DMCC) reinforces the “Brussels Effect,” which ITIF has argued constitutes a form of digital imperialism that hinders innovation in the Global South. Brazil is one of many countries now contemplating such regulation.

The specific legislation before the Brazilian National Congress is Bill 4675/2025, which establishes a formal ex ante regulatory framework for digital platforms under Brazilian competition law. The bill adopts rules for designating “economic agents of systemic relevance in digital markets” based on criteria such as network effects, user data access, user base size, and financial turnover in Brazil and globally, and imposes special obligations on these firms on a case-by-case basis. It also establishes a new unit within the Brazilian Administrative Council for Economic Defense (CADE) called the Superintendência de Mercados Digitais (Digital Markets Superintendency). This new unit would have the authority to open a designation process and oversee competition in digital markets.

A previous bill of this nature ultimately failed to pass through the legislature. Now, Congress has received a formal request to expedite the process of moving the current bill forward for a plenary vote. This request, known as a “regime de urgência” (motion for urgency), is a mechanism in the Brazilian legislature that permits a bill to be fast-tracked and bypass the typical debate stages and reviews by several committees, moving it directly to the floor for a vote.

As ITIF has explained, the lack of market failure in Brazilian digital markets makes the regulation entirely unnecessary—let alone something that should be rushed forward in the legislature in a way that avoids civil discourse and debate. Ex ante regulation of digital markets in the absence of persistent market failure risks an abundance of false positives, blocking conduct that poses no threat to competition, if not conduct that is welfare-enhancing. Indeed, even where anticompetitive conduct occurs, Brazil’s current competition laws are up to the task. Ex post competition enforcement, rather than ex ante regulation, tends to target conduct proven to have harmed competition, allowing firms greater freedom to innovate. As ITIF has noted, Brazil’s competition authority “has demonstrated its ability to handle complex digital antitrust cases… confirming that ex post enforcement can handle alleged abuses without new regulation.” Moreover, the new bill’s lengthy 10-year designation period could result in harmful inflexibility in rapidly evolving digital markets, binding firms to obligations that quickly become outdated.

As a CADE commissioner recently outlined, the new bill strikes a middle ground between the DMA, which imposes a blanket set of obligations on all designated “gatekeepers,” and the DMCC, which mandates company-specific obligations. While this is designed to limit the inefficiency of blanket bans on certain types of conduct across companies, company-specific obligations come with their own pitfalls as well. As reviewed in a comprehensive ITIF report on digital antitrust regulations, company- and sector-specific rules can lead to regulatory capture. The closer that regulatory agencies work with specific market actors, the more tailored, nuanced, and complex the regulation becomes. While this is partly being sold as a virtue of the Brazilian bill, over time, it can become a powerful force for locking in incumbents and erecting barriers to new entrants, paradoxically harming competition.

Furthermore, after a designation process conducted by the proposed Superintendency, the bill still outlines many per se bans that could come into effect, such as bans on self-preferencing, tying, foreclosure, and predatory tactics. While these categories of conduct could be anticompetitive in some cases, they are not consistently so, and banning them for a certain firm or class of firms would result in real inefficiencies, as the DMA has done in Europe. After the DMA’s implementation, for example, a trade survey indicated that as much as 35 percent of EU consumers found digital services had gotten worse. This is due directly to the per se requirements that obligate tech firms to de-integrate their services, such as Google’s de-integration of Maps with Search.

On top of harms to efficiency and innovation, the Brazilian bill may function as a discriminatory regime against American firms. Although the previous version of this bill’s threshold for triggering a designation decision was BRL 70 million (about USD 11.5 million) in domestic revenue in Brazil, the new bill raises the threshold to BRL 5 billion (USD 900 million) in domestic revenue or BRL 50 billion (USD 9 billion) in global revenue. The Brazilian authority itself estimates that this would capture only about 5 to 10 firms, and these are very likely to be predominantly American tech firms. This disproportionate inclusion, coupled with expansive compliance duties and heavy fines, risks imposing greater burdens on American companies compared with other foreign-based or local competitors.

The fact that digital markets undergo rapid change and continuous creative destruction provides all the more reason to exercise caution around ex ante regulation and to consider the perspectives of a multitude of parties before moving forward with a vote. Brazil should resist the temptation to replicate Europe’s regulatory experiment without clear evidence that its own digital markets suffer from identified harms that are not remediable under Brazil’s existing competition law. Despite the current Brazilian executive’s preference for moving it through, rushing Bill 4675/2025 under a motion for urgency would compound the risks of such regulation, substituting speed for deliberation on a framework that could reshape Brazil’s innovation ecosystem for years.