The transition in the communications thematic group

Blanca Alaníz, Quadrados series, digital photography and photomontage based on the work Planos em Superficie Modulada by Lygia Clark no.2 (1957), Brasilia, 2016
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By CARLOS ALVES MÜLLER*

What effectively is in the spectrum of work of the group coordinated by Paulo Bernardo

The former minister of communications and coordinator of the communications thematic group of the transitional office of the elected government, Paulo Bernardo, defended, a few days ago, the collection of taxes on large technological platforms, known as big techs – Alphabet (owner of Google and Youtube, among other companies), Meta (controller of Facebook, Whatsapp and Instagram, and many other technology companies), Amazon, Apple, Microsoft, etc.

He said: “I think we have to evaluate here in Brazil how this is going, if it is viable. If you look at telecom, big company, small company, the tax can reach 40%. And the internet giants pay nothing. There's definitely a problem there. I think this will have to be thought about. We are not going to give a solution because it is not our task, but we can point out an idea” (newspaper The Globe, on 14/11).[I]

Another member of the group, former federal deputy for the PT and former president of Telebras Jorge Bittar, defended the application of subsidies with the objective of reducing the digital gap in Brazil. “Eventually, we will have a combination of taxes and public subsidies, but all within the rules and budget limitations. The poorest children stopped following classes during the pandemic because they did not have internet in their homes. We can, judiciously, start with the schools, with the children enrolled, and extend this right to the entire population”, he added.[ii]

The caution of both is understandable, among other reasons to prevent the ideas they expounded from being identified as public policies that are already definitive and, as they refer to a politically sensitive area, from being the object of a contrary blitz, as happened every time the PT governments and sectors from the left mentioned the hypothesis of measures with the objective of updating the regulation (which exists, by the way) of the media.

By the way, on the day this text was being written, federal deputy André Janones (Avante-MG), also a member of the technical group of media for the transitional government and exponent of the presidential campaign in the second round, traveled a few kilometers from the capital to flirt with danger. In an interview at the Centro Cultural Banco do Brasil, where the transition team is located, he explained that there is concern about demanding rules from those who publish content, but that media “regulation” is “not exactly the word”… “We need to re-discuss communication through social networks and this re-discussion, it goes through a more punitive legislation”, he added, according to the website Telesynthesis.[iii]

Media regulation, social or otherwise, is a sensitive issue because among its defenders there are those who confuse the public interest in journalism with government political propaganda and, on the other hand, those who use the mantle of freedom of expression as a shield in defense of particular and often far from "republican" interests. The combination of both has always ended up suffocating balanced debate on the subject. In any case, this is another question, to be eventually analyzed at another opportunity. The aim of this article is to comment on what is actually included in the scope of work of the group coordinated by Paulo Bernardo.

Establishing a fiscal balance between the tech giants and the other sectors of the communications and digital economy is justifiable and necessary and is already being done by other countries, not just in relation to the telecom companies that are already big enough to defend their interests , but also when it comes to supporting much smaller companies, subject to leonine clauses and suffering multiple abuses of economic power when they try to resort to the giants to develop electronic versions for their businesses.

It's not just about asymmetric rates. Brazil urgently needs fiscal reform. Legislative initiatives have come up against the fragmentation of the National Congress and pre-existing distortions of representativeness, but maintained by the 1988 Constitution, which means that each proposal faces insurmountable barriers erected by opportunist coalitions. The subject, in any case, is the subject of another thematic group on the transition. However, given that the team led by Paulo Bernardo, according to Jorge Bittar, is considering the possibility of proposing the mentioned subsidy, it is important to consider that such a measure could backfire.

In short: Brazil is already one of the countries with the highest tax rates on telecommunications services in the world, as has been pointed out by periodic Anatel reports, such as that of February 2020 which, in the first paragraph of its conclusions, stated: “ Regarding the tax burden, little has changed in relation to the last report. Among the main economies and telecommunications markets, Brazil is the one with the highest tax burden on broadband and one of the highest (4th) on mobile telephony (40,15%). In the case of mobile telephony, among the main national service markets, only Turkey is ahead of Brazil in terms of taxation”.[iv]

In view of this, subsidizing low-income users, depending on how it is done, may mean increasing companies' revenues, when the most appropriate course of action may be to reduce the tax burden in general or require telecom operators to contribute to providing access to the population of low income through popular tariffs. Especially because, as recommended by an interesting study by the OECD on telecommunications and radio broadcasting in Brazil (whose analysis by the Working Group is highly recommended)[v] “Brazil needs to harmonize taxes on communication services between states and reduce them where possible. A single licensing regime would minimize legal costs, administrative burden and the potential for tax arbitrage. In the long term, Brazil needs to make an effort to carry out a profound tax reform of the legal framework referring to indirect taxes, with the objective of reducing the distortions caused by the current treatment of indirect taxation.”, says the text on page 16.

The digital giants operate from tax havens as a broad form of tax avoidance in their operations and in relation to the income of their shareholders who soon pose as philanthropists, as happened recently with the controller of Amazon, Jeff Bezos, who announced that before he died will donate “most of his fortune”, estimated at US$ 123,9 billion[vi] (which did not stop him from announcing the dismissal of ten thousand employees[vii] and being sued by his former housekeeper[viii].

The detail, ironically pointed out by Marina Hyde, a columnist for the British newspaper The Guardian is that he gets US$ 205 million richer every day, but pays less taxes than any citizen who has taxes deducted from their salaries – and that doesn't mean he gives interviews or is the subject of articles about his generosity and civic spirit. Another famous billionaire, Warren Buffett, admits that he pays less taxes than his secretary and even thinks it's reasonable to pay more. But these are already sordid details of the behavior of genius digital entrepreneurs and there is no reason to dwell on it.

The fact is that the big tech and its shareholders should pay high taxes on their revenues, but taxing them on time is not a solution neither for tax injustice nor as a way to increase collection. In any case, non-payment of taxes is not the biggest problem in relation to them and the abuses they practice, such as the abuse of a dominant market position practiced by Google through its price comparison tool. This anticompetitive practice led to a fine of more than €2,4 billion, applied by the European Commission and confirmed by the General Court of the European Union on November 10 last year. Despite the impressive value, the punishment did not even come close to affecting Alphabet, which had a net profit, in 2021, of more than US$ 76 billion, that is: more than double what it is estimated it would cost for Brazil to secure the new Bolsa Família of R$600 plus an additional installment of R$150 per child up to six years old for the whole year of 2023!

Even more recent is the agreement reached by Alphabet and attorneys from 40 US states, whereby the company will pay US$ 391,5 million (about R$ 2 billion) in a fine to close lawsuits against Google, initiated in 2018 for illegally tracking the location of users, even after they opted out of tracking. As in other cases, the amount of the penalty is high, but nothing compared to the company's revenues, which, in the first half of this year alone, had revenues of US$ 111 billion from advertising. In addition to the fine, according to the Reuters news agency, "Google should be more transparent with consumers about when location tracking is taking place and provide users with detailed information about geolocation data on a special web page."[ix]

The purpose of summarizing such facts about the (bad) business practices of big techs it is not to emphasize his villainy. If that were the purpose, the list would be long, probably longer than the eventual readers of this article are willing to go through. What is worth emphasizing is that it will not be fines or taxes that will make them act differently. Even the proposition of specific legislation such as the one that has been discussed regarding the propagation of false news (fake news) through their platforms will probably have a limited effect, among other reasons because technology and companies' marketing practices are extremely (and in this case the word is not a cliché) dynamic. Most of the standards adopted around the world have proved to be obsolete when they come into force, that is when they actually come into force, not being kept in a semi-limbo, as with the Brazilian General Data Protection Law, which is actually good legislation , as it has been recognized internationally.

What has just been said does not mean defending inaction or waiting for companies, pressured by the governments of developed countries, to be forced to change their practices. As recognized by the philosopher and professor emeritus of Harvard Business School Shoshana Zuboff, we live under surveillance capitalism and the European Union has made the greatest progress in curbing its voracity and protecting citizens and democratic institutions.

Getting to know better what the European bloc has been doing in this area and trying to establish forms of cooperation with it will greatly facilitate the actions of the future government. It is something that is within reach of the working group led by Paulo Bernardo. In the meantime, allow me to suggest reading some books about[X] and to indicate the website of the European Union where more information can be obtained: Digital Markets Regulation: Ensuring fair and open digital markets (europa.eu).

Before concluding, it is necessary to quickly address two important points that must be included in the Working Group's agenda: the questions (1) of the recognition and remuneration of copyrights by digital platforms and (2) of the responsibility for the algorithms used by digital platforms.

In several countries, rules have already been approved that determine remuneration for journalistic content by Internet platforms. A provision with this content is contained in Bill 2630/20, named “Brazilian Law of Freedom, Responsibility and Transparency on the Internet” and improperly known as “PL das Fake News”. One of its articles, number 38, added to the original project approved in the Senate, establishes that: “The journalistic contents used by the providers will give rise to remuneration to the holder of the author's rights of the content used, except for the simple sharing of internet protocol address of the original journalistic content and the provisions of article 46 of Law No. 9.610, of February 19, 1998…” [copyright law in force] and determines that the regulation of the law provides for “criteria, forms for measuring values, negotiation , conflict resolution, transparency and appreciation of professional journalism”. This newsroom, however, faces opposition from various journalistic entities which, headed by the Brazilian Press Association, called for its suppression in a manifesto released in April of this year.

Not without reason, the signatories of the manifesto argued that: “In several countries that are currently discussing the subject, including Brazil, there has been an aim, for example, to create funds to support the development of journalism based on the taxation of platforms such as sustainability of journalism. Only an in-depth debate on the issue would allow the country to define the best path for its historical needs.

Therefore, we believe that article 38 should be removed from the text in its entirety for due and urgent discussion on means of financing and strengthening journalism, with a view to building a balanced remuneration model dedicated to supporting the entire sector and also to equating any imbalances between small and medium-sized companies and initiatives and the large groups operating in the country.”

Newspaper companies and their corporate entities prefer that the matter be treated as part of PL 1354/2021, which “amends the MCI [Civil Framework for the Internet], with the purpose of creating a stimulus to the plurality and diversity of news, ensuring measures of protection of national journalism and fight against fake news, to adopt a policy of non-discriminatory treatment of legally established newspapers, magazines, radio and television media companies, as well as to create mechanisms of equanimity, plurality and diversity of content on the Internet”.

Through Deputy Denis Bezerra (PSB-CE, also author of PL 1354/2021), the business entities proposed and to the Commission for Science and Technology, Communication and Informatics – and obtained – the approval of holding a public hearing, still undated , with the aim of debating the aforementioned project. The guest list is indicative of the content proposed for discussion with the majority presence of representatives of the technology and media business sector: 1. President of the National Association of Newspapers (ANJ), Marcelo Rech; 2. President of the Brazilian Association of Radio and Television Broadcasters (Abert), Flavio Lara Rezende; 3. President of the National Federation of Journalists (FENAJ), Maria José Braga; 4. Deputy Head of the Department of Economic Studies at the Administrative Council for Economic Defense (Cade), Marina Tovolli; 5. Representative of the Coalition Rights on the Network, Bia Barbosa; 6. President of IAB Brazil, Melissa Vogel; 7. Meta company representative in Brazil; 8. President of Google Brazil, Fábio Coelho; 9. Telegram company representative in Brazil; 10. Twitter company representative in Brazil.

Given the above, it is clear that the issue of copyright effectively needs to be discussed by the Working Group.

The second issue is the responsibility of digital platforms for the algorithms employed. Algorithms, as is known, are programs designed to search huge databases, classify this information according to criteria previously defined by its author and guide its destination. In theory, they would eliminate subjective distortions, but what actually happens on the internet is that the criteria are neither known nor likely to be known.

In addition to trying to capture and keep Internet users connected for as long as possible and motivate them to share the content selected by the algorithm based on a multitude of factors, as happens in social networks, they can be a factor that induces discrimination and inequality. This is what happens when a job applicant screening algorithm systematically excludes people of a certain gender or ethnicity.

It was researching what happened in these situations that Dr. Cathy O'Neil, PhD in Mathematics, wrote the book Weapons of Mathematical Destruction – How big data increases inequality and threatens democracy.[xi] That is why any government that intends to reduce inequalities and promote democracy and social justice must be concerned with regulating the use of algorithms. One more task for the Working Group led by former minister Paulo Bernardo.

*Carlos Alves Muller, journalist, holds a PhD in social sciences from UnB.

Notes


[I] FERREIRA, Paula. Paulo Bernardo, from the transition team, says that the new government will have to assess the feasibility of taxing 'big techs' O Globo 14/11/2022. Available in: https://oglobo.globo.com/economia/noticia/2022/11/paulo-bernardo-da-equipe-de-transicao-diz-que-novo-governo-tera-que-avaliar-viabilidade-de-taxar-big-techs.ghtml

[ii] RODRIGUES, Eduardo and FROUFE, Celia. Lula's transition team evaluates subsidizing 5G telephony for low-income families. The State of São Paulo 15/11/2022. Available in: https://www.estadao.com.br/economia/equipe-de-transicao-de-lula-avalia-subsidiar-telefonia-5g-para-as-familias-de-baixa-renda/

[iii] CRUZ, CAROLINA. Janones: New Government Wants “More Punitive” Law for Fake News Telesíntese 17/112022. Available in:

https://www.telesintese.com.br/janones-novo-governo-quer-lei-mais-punitiva-para-fake-news/

[iv] Anatel (2020), Tax Load Level Report and Cost of Telecommunications Services - International Comparison, [Brasilia, Available at: Report on tax burden and cost of telecommunications services (anatel.gov.br)

[v] OEDC. OECD Assessment on Telecommunications and Broadcasting in Brazil 2020. Available at:

https://www.oecd-ilibrary.org/docserver/0a4936dd-pt.pdf?expires=1668721825&id=id&accname=guest&checksum=F534F17E2C171E7902CAB7D0C7ACC4FE

[vi] BLOOMBERG/O GLOBO. Jeff Bezos plans to donate most of his wealth to charity during his lifetime. 14/11/2022 Seattle. Available in: https://oglobo.globo.com/economia/negocios/noticia/2022/11/jeff-bezos-planeja-doar-em-vida-maior-parte-de-sua-fortuna-para-a-caridade.ghtml

[vii] THE NEW YORK TIMES/O GLOBO. Amazon plans to lay off 10 employees in corporate and technology areas, says newspaper. New York, 14/11/2022

https://oglobo.globo.com/economia/negocios/noticia/2022/11/amazon-planeja-demitir-10-mil-funcionarios-de-areas-corporativa-e-de-tecnologia-diz-jornal.ghtml

[viii] BLOOMBERG/O GLOBO. Amazon's Jeff Bezos is sued by former housekeeper for racism and exhausting hours. New York, 03/11/2022. Available in: https://oglobo.globo.com/economia/noticia/2022/11/jeff-bezos-da-amazon-e-processado-por-ex-governanta-por-racismo-e-jornadas-exaustivas.ghtml

[ix] BARTZ, Diane, SHEPARDSON, David and FREIFELD, Karen. Google to pay $391 million in settlement over user tracking investigation. REUTERS/FOLHA DE S.PAULO. WASHINGTON, 14/11/2022. Available in: https://www1.folha.uol.com.br/mercado/2022/11/google-pagara-us-391-milhoes-em-acordo-sobre-investigacao-de-rastreamento-de-usuarios.shtml

[X] LANIER, Jaron. (2014). “¿Who controls the future?”; translated by Marcos Pérez Sánchez – Barcelona: Debate

MOROZOV, Evgeny. (2018). “Big tech capitalism ¿Welfare or digital neofeudalism?”; translation by Giuseppe Maio. Madrid: Enclave;

ZUBOFF, Shoshana. (2020). “The Age of Surveillance Capitalism – The Struggle for a Human Future on the New Frontier of Power”; translation by George Schlesinger, 1st edition. Rio de Janeiro: Intrinsic.

[xi] O'NEIL, Cathy. (2017). “Weapons of Mathematical Destruction – How big data increases inequality and threatens democracy”; translation by Violeta Arranz de la Torre – Madrid: Capitán Swing Libros;

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