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In the 5G era, 4G still dominates in Latin America

Postponed until H1 2021, Brazil’s 5G auction — tipped to be the largest in the world — will be decisive for the provision of the technology across Latin America. However, according to data from GSMA Intelligence, even with the experimental launch of the 5G network by some commercial carriers and several trials throughout the region, it is 4G technology that is set to pave the way for connectivity in Latin America for the coming years.

“We expect 4G to be the dominant technology for many years, coexisting with the growing number of 5G connections,” estimates Alejandro Adamowicz, director of Technology and Strategic Engagement for Latin America at GSMA. [restricted]“By 2025, the share of 4G will rise to 67 percent of total connections, driven by the growing number of smartphones — the adoption of which will rise from 69 to 79 percent between 2019 and 2025.”

According to the expert, Latin America is one of the top regions in terms of traffic growth, boosted largely by video and social networking applications. “The mobile network traffic is growing at an average of 50 percent per year, and in some countries it is doubling every 12 months,” he adds.

With GSMA estimating that USD 90 billion will be injected into the region’s GDP in 10 years through productivity gains, new products and services, and technology-based exports, the 5G network promises to update the Latin American digital landscape. The technology promises to provide increased internet speeds for end users, and increase adoption by business and government sectors, developing what are called “vertical applications” such as Digital Manufacturing, Oil & Gas, Smart Grid, Mining, Health, Transport, and Smart Cities. 

“The real innovative and transformational impact of 5G on the lives of end users will come from a variety of applications that 5G will unlock and that will be delivered through a B2B2C business model: operators selling services to companies that will transform them into tangible benefits for the people.” 

Looking forward to 5G auction day

In Brazil, though the auction of 5G frequencies has yet to take place, the country’s leading telecom carriers have already announced their plans for commercial networks involving the new technology. The idea is to use dynamic spectrum sharing (DSS), which would allow 5G connections on frequency bands that are already used by 4G, 3G, and 2G networks, eliminating the need to increase the spectrum. 

TIM Brazil — a Brazilian subsidiary of Telecom Italia — postponed its launch until this month, despite having announced the new service for three cities in September. Competitor Oi, on the other hand, launched its first 5G mobile internet commercial operation in capital city Brasília last week. Claro and Vivo began activating the technology in São Paulo, Rio de Janeiro, and other state capitals back in July. 

In addition to the carriers, tech behemoth Apple also intends to surf the wave of consumer excitement around 5G. Announced on Tuesday, all models of the new iPhone 12 in the U.S. will — according to the company — support millimeter-wave 5G, the fastest variant of the technology, as well as lower-frequency bands.

Outside the country, however, the new devices will not be compatible with millimeter waves. In Brazil, as well as in other countries, iPhone 12 models will only support lower-frequency versions of 5G.

After successive postponements, the 5G auction still has no defined rules and it will be up to President Jair Bolsonaro to give the final say on whether or not Chinese giant Huawei will participate in the process

Mr. Bolsonaro is reportedly considering banning the Chinese firm from providing components for the future network in Brazil, as he “sees China as a global threat to data privacy,” according to a senior government official anonymously quoted by Bloomberg.


This article on remote work was originally published on LABS – Latin America Business Stories, a news platform covering business, technology, and society in the region for an English-speaking audience.

https://labs.ebanx.com/

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Tech Roundup: Telecom regulator to incorporate postal services

You’re reading The Brazilian Report’s weekly tech roundup, a digest of the most important news on technology and innovation in Brazil. This week’s topics: the revamp of the Brazilian Telecom watchdog, Google trends for 2020 Black Friday, and the costs to mitigate interference with satellite TV ahead of the crucial 5G auction. 

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Telecom regulator set for name change, incorporating postal services

The recently recreated Communications Ministry presented its first big change this week: [restricted]rebranding the National Telecommunications Agency (Anatel) as the National Communications Agency (Anacom), which would be responsible for supervising both telecoms providers and the national postal service. 

Why it matters. The move has been framed as key in speeding up the privatization of Correios, the federally-owned postal company. The move has been planned since the Michel Temer administration and was included in President Jair Bolsonaro’s privatization plan. The cash-strapped government hopes to raise BRL 15 billion (USD 2.7 billion) from its sale.

  • However, the project never actually took off, due in part to intense backlash from civil servants.

Why the change? Communications Minister Fábio Faria said the proposal is “more about principles than rules,” as Congress will be responsible for defining Anacom’s role, as well as for deciding on the privatization of Correios.

  • If it moves forward, the bill would alter Brazil’s General Telecom Law, which deals with Anatel’s powers and responsibilities.
  • Mr. Faria added that the Brazilian Development Bank (BNDES) has hired consultancy firm Accenture to carry out studies on the privatization of Correios. Its findings shall be available within four months.

Benchmark. The structure of the new agency would be similar to Portugal’s Anacom, a communications watchdog that also handles postal services. The Portuguese institution had already been cited as a positive benchmark by Anatel chairman Leonardo Euler de Moraes.

Timetable. As the proposal has yet to be analyzed by the president’s Chief of Staff — before being put to Congress — there is no concrete expectation on when the change would be carried out.   


Pandemic trends to boost Brazil’s Black Friday

Black Friday has already established itself as one of the main retail events in Brazil. According to Google, things will get even bigger in 2020, as consumers transition to making their purchases online — a process fueled by the pandemic. Google searches for deals have already surpassed 2019 figures, weeks before the event on November 27.

  • Searches for some segments obliterated records to the point that normal search parameters have been altered. Current searches for “decor,” for example, are 51 percent above previous highs. “Food” and “drinks” — which are not the most sought-after products during Black Friday — saw jumps of 40 percent and 23 percent, respectively.

Looking for deals. Searches for sales grew 38 percent between April and July against the same period in 2019, reversing a trend seen in Q1. Google says the data shows Brazilians consumers have become more price-sensitive after the pandemic.

Cashback and coupons. Another major feature for consumers is the possibility of getting discounts or cashback on their online purchases. Searches for coupons are 35 times more frequent than cashback searches, but the interest for terms related to cashback is growing by 74 percent yearly — twice the rate of the interest for coupons.

Free shipping. In July, searches for free shipping were 118 percent higher than what was seen for last year’s Black Friday. Other postage solutions, such as express shipping and click-and-collect, are likely to become more relevant in the pandemic scenario. 

Why it matters. E-commerce has been retail’s silver lining during the pandemic, as the population’s consumer habits have become more digital while brick-and-mortar stores face restrictions. Other major selling events, Children’s Day and Father’s Day underperformed by 8.8 percent and 10.6 percent, respectively, which makes the retail season kickstarted by Black Friday even more crucial to the sector. 


Migrating satellite TV signal to reduce 5G interference is too costly, say companies

The possibility of interference with satellite TV dishes has been among the main roadblocks for Brazil’s impending auction of 5G frequencies. However, while Anatel has yet to reach a consensus on the matter, telecom companies are already presenting their own solutions. 

  • In a new study, Conexis Brasil Digital — an association gathering the main telecom providers and industry players in Brazil — found evidence to support the use of LNBF filters to mitigate 5G interference on satellite TV signals, at a cost of BRL 224 million (USD 40 million) for companies. Anatel, meanwhile, has demonstrated its support for migrating satellite signals to the Ku frequency band, a process which could be up to eight times more expensive. 

Understanding the issue. Using the 3.5 GHz frequency band for 5G runs the risk of causing interference with the reception of satellite antennas, affecting some 1.37 million homes in Brazil, according to Conexis. The problem is similar to the interference of 4G interference with analog TV signals, solved by installing devices on analog TVs, paid for by companies.

  • Earlier this year, the Science and Technology Ministry ordered Anatel to carry out studies to find out the best way to mitigate the interference, but tests were delayed amid the pandemic. 
  • Among the options, there is the adoption of filters or the migration of signals from the C band to the Ku band. The agency’s president, Leonardo Euler de Moraes, said in August that tests were still ongoing, but they were leaning toward migration. 

Costs. Conexis says that migrating signals would affect over 4.8 million homes — far more than those who may experience interference — and cost as much as BRL 1.8 billion. The association says that if the companies awarded 5G contracts are forced to pay for this, it would “harm the quick expansion and massification of the new technology.”


Take note

  • Phone loans. Telecom provider Vivo will launch a new credit service, VivoMoney. Customers of monthly phone plans may take out loans of up to BRL 30,000, with interest of 1.99 percent per month. The service will be fully digital and is Vivo’s latest attempt to become a digital hub beyond telecom services. 
  • System crash. Services of digital bank Nubank experienced instability on October 15, and many users reported glitches on the platform on social media. We at The Brazilian Report noticed instabilities on the bank’s Nuconta current account platform, but credit card services appeared to be working normal. In a statement to newspaper O Estado de S.Paulo, Nubank said the disruption was related to their internal services but provided no further detail.  
  • Partnerships. French ride-hailing app Blablacar will begin selling bus tickets in Brazil, after seeing usage drop by up to 60 percent in April. The app has partnered with 40 bus companies to offer tickets on its marketplace and hopes to reach 100 partnerships by 2021.  
  • Climate change. Brazil and the United Kingdom signed a cooperation agreement on sharing climate data and preventing natural disasters. The project Climate Science for Service Partnership Brazil (CSSP) will be carried out by three leading research institutes in Brazil (INPE, INPA, and Cemaden), alongside the UK Met Office. The project will have three main areas: carbon cycle modeling to inform mitigation policy, development of climate models, and climate impact and disaster risk reduction. The UK will provide GBP 4 million (USD 5.17 million) in funding, while each Brazilian institute will redirect funds of their budgets to the initiative, and the Science and Technology Ministry will contribute an additional BRL 500,000 (USD 89,000).
  • PIX. The Brazilian Central bank informed that over 33 million PIX “keys” have been registered in Brazil. Digital bank Nubank leads the way with roughly 8 million keys, followed by Mercado Pago — Mercado Livre’s digital wallet service — with 4.7 million keys. However, a report by website 6Minutos shows that users are accusing both services of registering keys without their consent, a practice they deny. The issue may also have been caused by scammers, as at least 60 fraudulent websites were found to be targeting PIX on the first days of registration. 
  • Marketplace. Digital bank Banco Inter opened up its marketplace platform to people that are not currently bank customers. New clients will have access to 100 stores registered on the platform and benefits such as cashback.[/restricted]
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Tech

Tech Roundup: Digital players thrive amid Brazil’s IPO boom

You’re reading The Brazilian Report’s weekly tech roundup, a digest of the most important news on technology and innovation in Brazil. This week’s topics: new tech players thrive in Brazil’s IPO spree, the growth of contactless payments in Brazil, and the federal government’s booming spending in IT. 


IPO boom brings Brazilian investors closer to digital players

2020 will be remembered by Brazilian capital markets as the year of the IPO boom. [restricted]As of October, at least 19 companies have held initial public offerings on São Paulo stock exchange B3. But unlike IPO sprees of the past, this one has a tech element that may give investors unprecedented opportunities.

Markets ready for an IPO boom. In its latest offer, digital second-hand marketplace Enjoei offered its shares within the BRL 10.25 to BRL 13.75 price range. If successful, the sale may raise BRL 1.1 billion. Another newcomer is broadband provider Triple Play, which aims to reach up to BRL 1.7 billion on its offer. In September, at least four other digital players announced plans for an IPO:

  • Cashback startup Méliuz, wine subscription service Wine, digital estate agent Housi and Mosaico, the owner of price comparison platforms Buscapé, Zoom, and Bondfaro, have all applied for IPOs at B3. 
  • The case for tech IPOs in Brazil has been supported by prior success stories. Since going public in February, website hosting company Locaweb’s shares have risen by over 200 percent.  

Tech retailers. In Brazil, the biggest tech players are often e-commerce companies and this IPO wave is no different. According to Diogo Lupinari, CEO at tech company Wevo, which works to integrate systems and data, retailers are becoming so focused on tech in Brazil that “it’s even unfair to say they are not tech players.” In his view, the new entrants will beef up an incipient sector, but which already has strong players such as software providers Totvs and Linx, as well as major retailers. 

Is Faria Lima the new Wall Street? The decision to go public in São Paulo is a new trend for domestic tech players. While unicorns such as Nubank and Gympass have resisted public offers, finding plenty of venture capital funding available, other tech players such as XP, Inc. and Arco Educação have chosen Nasdaq as their home. 

  • Luan Gabellini, managing partner at Betalabs, a company focused on tech for e-commerce, believes the increasing number of investors in the Brazilian market made it more attractive to companies, and the new “IPO batch” is an important step to make the sector stronger.
  • For Mr. Lupinari, more tech companies still need to go public in Brazil before we can say capital markets are as popular as venture capital as a source of funding for startups. 
  • A new deal announced this week shows that the VC market is still going strong. Private Equity fund Warburg Pincus just made the biggest investment in a Series A round in Brazil: a USD 100 million investment in Take, a digital platform that helps companies communicate with customers through WhatsApp.  

Pandemic spurs boom of contactless payments and mobile shopping

Social isolation and hygiene measures linked to the Covid-19 pandemic gave an extra boost to the adoption of contactless payments in Brazil, according to a new report by Mobile Time/Opinion Box.

  • From March to August, the share of Brazilians that carried payments through QR Codes jumped from 35 percent to 48 percent. 
  • The share of consumers who use contactless payments by their mobile devices jumped by 10 percentage points, to 33 percent. In comparison to August 2019, the share basically doubled. 

M-commerce. The share of Brazilians who have purchased goods and services through their phones reached 91 percent in August. The frequency has also grown and now 83 percent consider themselves monthly active users and 76 percent of Brazilians say they buy products on their phones more than they do on computers. 

  • The preference for mobile phones, however, may be a symptom of social inequality, as the preference is higher among low-income classes, which are less likely to own computers. 

New trends. The pandemic has also accelerated new trends. Of all the segments analyzed, food delivery had the best performance: as of August, 83 percent of Brazilians said they had ordered meals through an app — 11 percentage points above March levels. Another surprising boost came from beauty services: as of August, 22 percent of Brazilians had used an app to require such services — 6 percentage points above March levels. To do this, 42 percent of the users resorted to WhatsApp. 


Government IT purchases speed up during pandemic

Covid-19 highlighted the need for digital transformation across the board and it is not different in the Brazilian government. From January to August, IT purchases by the federal government increased 25 percent, reaching BRL 876 million, according to a study by Effecti, a platform specialized in technology for public procurement, seen by Convergência Digital website. 

Higher prices. The increase in spending came despite a reduction in the number of contracts, showing that the government is paying more for services. The median value per contract was BRL 43,000, or BRL 2,000 above 2019 levels.

Strategic areas. The government areas that spent the most on IT in the period are, in that order, the Air Force, Economy Ministry, Regional Development Ministry, Federal Service for Data Processing (Serpro), and Justice Ministry.

Pandemic impacts. That the Economy Ministry is second place on the list could be explained by the technological effort to implement the government’s BRL 600 coronavirus emergency aid program for the unemployed and informal workers. According to the report, several of the biggest contracts in the period were related to the pandemic, including a BRL 29 million agreement between the Economy Ministry and state-owned firm Dataprev.  

More to come. The full digitalization of federal services is one of the goals of the Jair Bolsonaro administration. Currently, the Economy Ministry estimates that 60 percent of the 3,800 services offered by the government have already been made digital. 

  • The government is also hiring 350 IT professionals temporarily and has just announced a new bidding process for 160,000 Microsoft Office 365 licenses, at an estimated total cost of BRL 48 million. 
  • Meanwhile, Brazilian development bank BNDES is moving forward with its plan to privatize Serpro and Dataprev. This week, the bank opened a selection process to hire due diligence services for the operation. 

Take note

  • Ransomware. Petrochemical company Braskem, the largest resin maker in the Americas, suffered a ransomware attack that interrupted its operations on Thursday. According to the company, its security system blocked the attack before data was lost, but operations were interrupted. According to newspaper Valor Econômico, the disruption led the company to declare force majeure to some clients, though it is working to reestablish operations. 
  • Unicorn. Used car dealership platform Kavak became Mexico’s first unicorn, with a USD 1.15 billion valuation after a new fundraising round led by the Japanese conglomerate SoftBank, as well as investment firms DST Global and Greenoaks. The company, which operates in Mexico and Argentina, already has 800 employees and aims to hire another 500 ahead of its debut in Brazil in early 2021.  
  • Science and Technology. Nestlé launched a new open innovation Science and Technology lab in the city of São José dos Campos, in São Paulo state. The main goal of the center’s fifteen researchers is to develop new technologies based on the Industry 4.0 model, which will be tested at Nestlé’s facilities in Caçapava and, if proven useful, expanded to its entire production chain.   
  • SMB. Microsoft launched its management platform Microsoft Dynamics 365 Business Central for small businesses in Brazil. The company aims to grow amid a segment that often lacks operational and financial management tools. The Business Central will work on Microsoft’s cloud, Azure, and has features to help users to comply with the country’s new general data protection law LGPD. 
  • Digital law. Brazil’s National Council of Justice allowed courts from all over the country to execute lawsuits in a fully digital and remote way. The Juízo 100% Digital project allows plaintiffs and defendants to opt for their hearings to take place via video conferences, while courts will be forced to provide the necessary infrastructure. Results will be analyzed within a year, when courts will decide whether to adopt the model permanently or not. 
  • Internet access. Colombia’s House of Representatives approved a bill that aims to make internet access an essential public service. The project has broad support from lawmakers and the federal government, according to the local press, and could be the first step toward policies that grant universal access, especially for lower-income populations. 
  • Labor laws. For the first time, a Chilean court recognized the existence of an employment relationship between a delivery app and a courier, granting the victory to a worker in a lawsuit against delivery app PedidosYa over his dismissal without cause. The ruling comes as Congress discusses a bill to grant social security protections to app workers. [/restricted]
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Tech

Tech Roundup: Can WhatsApp curb fake news in the 2020 election?

You’re reading The Brazilian Report’s weekly tech roundup, a digest of the most important news on technology and innovation in Brazil. This week’s topics: Brazil’s efforts to curb misinformation on WhatsApp ahead of the elections, e-commerce performance with Black Friday on the horizon, and the dreadful cybersecurity scenario for Latin America’s company’s and individuals. 

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Electoral courts and WhatsApp team up against fake news. Will it work? 

One and a half months before the 2020 municipal elections, [restricted]Brazil’s Superior Electoral Court launched a new bot, in partnership with WhatsApp, to increase access to reliable information both on sanitary measures and electoral rules. While experts recognize the good intentions of the initiative, they say the fight against misinformation needs broader strategies.

How the bot works. Users must add a number provided by the Electoral Justice system to their list of contacts in order to interact with the bot. Then they will receive messages with information about their polling station, which safety measures to observe when heading out to vote, as well as fact-checked news on the election.

  • There will also be a dedicated channel to denounce numbers that send mass messages during the campaign — which is forbidden by local electoral legislation. This feature, though, will be deactivated by December 19.

Step in the right direction. Débora Albu, coordinator of democracy and technology at think-tank ITS Rio, tells The Brazilian Report that structuring an anti-fake news strategy around WhatsApp — used by almost all Brazilian smartphones — is “very positive.” 

  • “Voters don’t need to leave a platform they already use, they don’t need to create new digital skills. The process is very simple and this is crucial.”
  • Plus, the partnership with Facebook — which owns WhatsApp — points in the direction of a partnership between the public sphere and the private sector that might come in handy during elections. “Unlike 2018, there is now an attempt to join solutions and new initiatives, so you have a unified front,” she said.

Yes, but … Ms. Albu warns the only way to tackle such a complex issue is through a more comprehensive strategy, involving political and media education — something a simple WhatsApp bot cannot handle. 

Regulation. Previously heralded as one of the pinnacles of Congress’s reaction to misinformation, the controversial “fake news bill” remains far from approval.

Digital campaigns. Official campaigns began on September 26, but mayoral candidates launched their online strategies on Facebook, Twitter, and WhatsApp weeks or months ago. 

  • After Jair Bolsonaro won the presidency in 2018 with a campaign almost entirely conducted on social media and WhatsApp group chats, politicians have become obsessed with their online presence. But followers do not strictly translate into votes — and the most engaging candidates on social media are not the ones who are polling the best.
  • “That’s because engagement doesn’t only come from supporters, but also from people who want to confront candidates.”

Brazilian e-commerce losing steam? 

After breaking records earlier in the year, Brazilian e-commerce shrank 9 percent in August, according to data from the Brazilian Chamber for E-Commerce. While sales raised 75 percent more money than in August 2019, year-on-year growth was at 136 percent back in May.

Why it matters. Big retailers have poured millions into improving their online sales channels, but e-commerce sales are decreasing as brick-and-mortar shops reopen.

Capital markets. All of Brazil’s top 4 retailers saw share prices drop by as much as 21 percent in September.

  • Stocks analyst Eduardo Guimarães, of Levante Investimentos, points out that the sector has seen expressive gains over the year. As Nasdaq and Ibovespa lost steam in September, investors saw an opportunity for profit-taking.
  • In Brazil, retail companies such as Via Varejo became favorites among retail investors, which may have caused trading volumes to boom temporarily. “The frenzy has died down a bit,” says Mr. Guimarães. 
  • Institutional investors are betting on e-commerce. BTG Pactual bank replaced traditional retailer Lojas Americanas with Magazine Luiza on its monthly recommended portfolio, saying the latter is “well-positioned to continue growing above the market.”

Challenges. As retailers prepare for Black Friday, Amazon Inc will host its first Prime Day in Brazil on October 13 and 14. Besides being a proxy for the biggest shopping sprees in the year, it could also spell trouble for competition.

Yes, but… It’s not the first time the market has jumped the gun in response to Amazon’s moves. When the American giant announced it was expanding to Brazil, domestic retailers’ stock melted, but Amazon has since taken a very cautious approach to the Brazilian market.

Holiday season. Q4 is traditionally the best time of the year for retailers. “However, sales could be hurt by weak brick-and-mortar sales,” Mr. Guimarães tells The Brazilian Report.


Brazilian companies targeted by cybercriminals

A new report by cybersecurity firm Kaspersky shows that Brazil is home to 56 percent of all cyberattacks in Latin America. From January to September, Kaspersky noted 37.2 million attacks on companies in the continent and another 20.5 million to home users. 

Remote work. The Remote Desktop Protocol (RDP), which allows users to connect to other computers, suffered 517 million attacks in the region. The peak happened in April, coinciding with the beginning of several quarantines in Latin America.

  • “The adoption of remote work made it easier for cybercriminals to attack systems that were not available on the internet,” said Dmitry Bestuzhev, head of Kaspersky’s GReAT team in Latin America.

Vulnerability. Though it is the most targeted, Brazil isn’t the most insecure place. According to the report, Argentina has the highest “coefficient of attack” — the proportion of attacks per capita — for both companies and home users. 

  • However, Brazilians are the most vulnerable to attacks on mobile devices. The country recorded 63 percent of the 1.2 million attacks of this kind reported during the period. 

Take note

  • LGPD. Homebuilder Cyrela was the first company fined on the grounds of the General Data Protection Law in Brazil. The company was found guilty after a customer sued it for being spammed with emails from Cyrela’s partners, evidence that the homebuilder shared his data without consent. Cyrela now has to pay BRL 10,000 in compensation and an extra BRL 300 for every undue attempt to contact the customer.
  • SMB. A new report by consultancy Neotrust/Compre&Confie shows that online sales by small- and medium-sized businesses in Brazil nearly doubled between February and August, bumping revenue by 118 percent. The leading segment was home appliances, with a near 400-percent growth, followed by furniture (+241%), decor (+217%), health (+212%), and cameras and drones (+205%).
  • Acquisition. Bitz, the digital wallet launched by Bradesco a few weeks ago, has already made its first acquisition: buying fintech DinDin for an undisclosed amount. The deal comes as Bitz tries to obtain knowhow to achieve its goal of grabbing a  25-percent market share in digital wallets in Brazil over the next three years. 
  • Startups. Google launched its Growth Academy initiative in Brazil. The ten-week program offers mentorship and teaches growth techniques to startup leaders that already have some market traction. The first edition will be fully digital due to Covid-19 and will include companies such as health food startup LivUp, cosmetics brand Sallve, and pet store Zee Dog. 
  • Digital Ecosystem. Data from think-thank Distrito obtained by newspaper O Estado de S.Paulo shows that large companies purchased 100 startups in Brazil between January and September — the largest number on record. The trend is propelled by digital transformation needs, the urge to launch new business fronts, and the availability of capital due to an environment of low interest rates. 
  • Unicorn. Fintech dLocal became Uruguay’s first unicorn in September, with a USD 1.2 billion valuation. It reached the milestone after a new USD 200 million funding round led by General Atlantic. The company offers payment solutions in Asia, Latin America, and Africa, with high-profile customers such as Amazon.com and Nike. 
  • Crowdfunding. The Brazilian Securities Commission canceled the operating permit of crowdfunding platform Finco Invest after several irregularities, including fraud, acting as qualified investors without having the due certification, and lack of due diligence processes. 
  • Agritech. Sugar and bioethanol group São Martinho teamed up with Ericsson to launch a 5G pilot in one of the group’s sugarcane plantations in São Paulo state. The new network will allow them to connect trucks and machines and speed up the harvesting process from 2021 on. If it works, the partnership will be expanded to other plantations of the group and new products and services both companies aim to offer in the market. 
  • Drones. Food delivery app iFood will test drones to deliver meals in the city of Campinas, in the state of São Paulo. The restaurants will take the food to hubs where the drones are stored. Then, the machines will fly to delivery centers and, from there, couriers will drive it to consumers. iFood believes that, in some routes, the process may shorten delivery times from 10 to 2 minutes. The tests are expected to last for 12 months and, if they succeed, the model may be adopted in another 200 cities.[/restricted]
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EXCLUSIVE: Initial impacts of Brazil’s new Data Protection law

You’re reading The Brazilian Report’s weekly tech roundup, a digest of the most important news on technology and innovation in Brazil. This week’s topics: the first impacts of Brazil’s new data protection law, challenges of green lithium mining in Latin America, and Brazil’s booming electronic sector. 

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First reactions to Brazil’s new Data Protection Law

Brazil’s new general data protection law (LGPD) is already causing a headache for non-compliant companies, [restricted]even though sanctions can only be applied as of August 2021. Exclusive data provided to The Brazilian Report by customer protection institute Reclame Aqui shows that customers have wasted no time filing grievances related to data protection. In the week the law was enacted, complaints went up almost 74 percent.

  • So far, no one company or sector has been affected the most. Giants such as Banco Pan bank, retailer Magazine Luiza, and credit bureau Serasa Experian were among the firms that received the most complaints from customers.

Litigation. At least two companies have faced lawsuits concerning data protection issues. The first was filed by the Public Prosecution Service in the capital city Brasilia, suing a Minas Gerais company that sells personal data such as people’s names, emails, addresses, and phone numbers. Prosecutors believe over 500,000 people in the state of São Paulo alone had their information sold — but there were victims from all over the country.

  • Meanwhile, in Recife, a student filed a lawsuit against the company that manages the city’s public transport card system, after his card was blocked due to a lack of biometric registration. The student questions whether the company even has the right to collect biometric data.

Why it matters. Brazilian consumers are increasingly aware of their rights over their personal data. While companies will have one year until fines are issued, the first days of the law show that they better get their act together.

  • A March 2020 survey by Serasa Experian showed that 85 percent of companies had yet to adapt to the new rules. While most big corporations have the structure for major changes, there remains much uncertainty about whether small firms will be able to comply with the rules.

Could electric vehicles turn South America mining firms green?

Recent projections by consultancy firm GlobalData state that electric cars will make up almost 12 percent of the world’s total vehicle production by 2030. These forecasts have jacked up demand for the minerals used in batteries, piquing the interest of mining companies in South America. The region is home to around 60 percent of the world’s lithium — a key component in modern battery cells.

Yes, but … Companies are increasingly concerned about the sustainability of their supply chain, with electric car giant Tesla announcing it wants to remove cobalt from its batteries due to its environmentally harmful production process. 

  • Emily Hersh, managing partner at financial consultancy DCDB Group, says that it is not only about having the resources — but about the ability to exploit them. “Many countries only have aspirational projects. They have to attract investors to finance and develop the sector, which takes years and hundreds of millions of dollars,” she told The Brazilian Report.
  • Moreover, legal and political insecurity — Bolivia, for instance, witnessed a coup d’état in 2019 — may scare investors away, making many projects unviable. These factors could turn countries such as the U.S., Canada, and Germany into bigger lithium producers, despite having smaller reserves.

Challenge. Ms. Hersh points out that South American countries have both ends of the production chain: the inputs and a potential consumer market. Developing battery factories is the true challenge. 

Change. Ana Costa-Gardner, co-chairman of miner Sigma Lithium, believes that lithium “should bring prosperity to the areas in which it is found,” which are some of the driest and poorest places in South America.

  • Sigma Lithium has just raised USD 13.3 billion to extract lithium from the Vale do Jequitinhonha, one of Brazil’s least-developed areas. Since 2013, BRL 200 million has been invested in the project, with another BRL 450 million to come, says Ms. Costa-Gardner.
  • Construction on facilities is about to begin and Sigma expects to start production by early 2022.
  • The company has a strong focus on ESG standards (environmental, social, governance) and adopted technologies such as dry-stacking to protect the environment. “How could I use water to fill a dam with mud in the middle of a semi-arid area — where people don’t have access to water? It makes no sense.”
  • In partnership with industry educational service SESI, they have trained local people to work as technicians in the mine. Also, by assembling a plant near the mine – and not the port – Sigma aims to foster the area’s development.    

Electric cars in South America. Ms. Cabral-Gardner believes Brazil’s auto industry will sustain its leading position in the transition toward electric vehicles, but she doesn’t see major fleet changes in the next “five years or so,” as the country’s cars already predominantly run on ethanol — which is already “greener” than gasoline. However, she sees major potential for electric buses, as they are major polluters in local cities and don’t face infrastructure obstacles as cars would, as they can be charged while in bus depots.


Despite currency woes, electronics sales skyrocket in Brazil

No currency has lost as much ground against the U.S. Dollar as the Brazilian Real. Still, the sales of electronic goods in Brazil — often affected by foreign exchange fluctuations — have been promising, according to new reports.

  • A study by consultancy GfK shows a 32-percent jump in July against the same month last year.
  • Meanwhile, sales of wearable devices such as activity trackers and smartwatches grew by 21 percent in Q2 2020 (against Q2 2019).

Why it happened. Experts say it is a normal trend: first, consumers go into a “panic” phase and withhold spending. Then, they usually enter a period of “indulgence.”

What to expect? Companies such as Samsung and Panasonic have high hopes for this year’s Black Friday and Christmas season. Panasonic Brazil CEO Michikazu Matsushita said he believes in “double-digit growth rates” for both dates.


You should also know

  • Crypto. Brazilian fintech Hashdex is launching the first exchange-traded fund for cryptocurrencies in the world. The Hashdex Nasdaq Crypto Index ETF, as the product is called, was developed in partnership with tech stock exchange Nasdaq and will replicate the Nasdaq Crypto Index. The ETF will be listed in the Bermuda Stock Exchange (BSX), as the country is known for innovative legislation for digital assets. 
  • Entertainment. In Argentina, the first fiction series broadcast via WhatsApp, entitled “Velozapp,” will be launched. Users will receive a digital flyer through the app, where they can click a button to watch all six episodes for up to four minutes. The series is completely adapted for cell phone screens and is the result of a partnership between the Foundation for International Studies and Rolling Films. 
  • Android. In 2019, the revenue of all companies directly connected with Android-based products reached BLR 136 billion in Brazil — 2 percent of the country’s GDP. The survey was carried out by global consultancy Bain & Company and showed that 35 percent of workers in the technology and telecom industry are part of the Android chain.
  • Environment. A social-media bot called “Da Mata Repórter” (@DaMataReporter) is posting information and alerts about deforestation in the Amazon rainforest on Twitter. The project uses an environmental monitoring platform developed by the National Institute for Space Research (Inpe) and was developed through a partnership between the Federal University of Minas Gerais and the University of São Paulo.
  • Credit. Uber has partnered with fintech Digio to offer a credit line to its drivers and couriers in Brazil. Loans ranging from BRL 1 thousand to BRL 5,000  will be offered at an interest rate of 2.7 percent per month and with a term of up to 12 months. Initially, the program will include 1,000 drivers and in the future will expand to all employees of the company, of which there are almost 1 million.[/restricted]
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Tech

Tech Roundup: Vale launches Brazil’s first electric train

You’re reading The Brazilian Report’s weekly tech roundup, a digest of the most important news on technology and innovation in Brazil. This week’s topics: Vale launches the first electric locomotive in Brazil, Claro’s push to revive pay-TV and app couriers moves to regulate their career.

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Brazil’s first electric train makes maiden voyage

Developed by mining giant Vale in partnership with U.S. company Caterpillar Progress Rail, [restricted]Brazil’s first electric locomotive made a successful maiden voyage on September 12. The new line connects the city of Sete Lagoas, in a mining-intensive region of Minas Gerais, to its Tubarão unit, in the state of Espírito Santo — the world’s largest pellet-producing center.

  • The train is in a trial stage and will be powered by a battery that can run for up to 24 hours without recharging.

Why it matters. The electric line is part of a Vale plan to reduce its carbon footprint by one-third by 2030 and go fully carbon neutral by 2050. According to the firm, railway transport makes up for 10 percent of its greenhouse emissions.

Yes, but … As Benjamin Fogel reported earlier this week, Vale still has failed to significantly improve safety procedures and suggest appropriate changes to its operations after multiple environmental disasters.

  • Federal prosecutors are launching a number of new lawsuits, claiming that Vale has still only made cosmetic changes.

Innovation. Besides the electric train, innovation efforts by Vale include a project to develop a 5G lab to support Industry 4.0 operations. 


Delivery app workers ask Congress to regulate industry

Left-leaning lawmakers and union leaders have requested House Speaker Rodrigo Maia to put for vote a bill establishing labor regulations on delivery apps. In a push for better wages and social security protections, app workers staged a strike in July — raising awareness about their often appalling working conditions.

What they want. Delivery workers want a “minimum wage” to be paid for each delivery. Over the past few years, logistics apps have become the most signifcant job-creating sector in Brazil, and increasing competition meant that workers were getting paid less and less for their work. In order to make 20 deliveries in São Paulo, workers must ride for an average of 15 hours — earning less than USD 0.19 per kilometer.

  • Moreover, they want apps to stop “blacklisting” disgruntled couriers that demand labor rights, and push for insurance against accidents and healthcare.

By the way. Motorcycle delivery has already been regulated in Brazil since 2009, with the law demanding special training before workers can start — as well as special protective equipment.

Results. Mr. Maia promised to create a special committee to draft a bill granting the workers’ main requests.


Claro wants to revive pay-TV in Brazil

According to Claro Brazil CEO José Félix, the telecom operator will launch a new service aiming to “rekind Brazilians’ interest in pay-TV.” During an online sector event, he said this new service will consist of “alternative subscription packages” for customers who don’t have access to Claro’s pay-TV services — but didn’t confirm if he was talking about a streaming service.

Why it matters. Pay-TV subscriptions have been declining for years in Brazil and Latin America. 

  • The region is expected to end 2020 with 62.2 million subscribers to streaming video services, a 36-percent increase on last year’s figures. Subscribers to this type of service are on pace to outsize the traditional pay-TV customer base for the first time ever.

Context. The announcement comes just days after Claro lost a legal battle against Fox. In 2018, Claro filed a complaint at the National Telecommunications Agency (Anatel) claiming that Fox+ breached the Brazilian legislation as it allowed for subscriptions without a distributor. Anatel, however, sided with Fox.

Newcomers. Besides this still-mysterious service by Claro, Brazil’s paid-for-content sector will include multiple new channels, with Disney+ scheduled to launch on November 17, and ViacomCBS’ Pluto TV arriving in December.

  • Pluto TV will use a free model, running ads between programs — much like traditional broadcasting. That setup has been considered successful in other Latin American countries. In Brazil, the service will premiere with 24 channels and on-demand movies.

Take note

  • Downsizing. Sony will shut down in March 2021 its electronics plants in the Manaus Free Trade Zone, after 48 years of operations. The decision comes as the company lost market share — but Sony will keep an office in Brazil to commercialize its best-selling product in the country: PlayStation consoles.
  • Jobs. Amazon Inc announced the creation of 2,000 remote jobs in Colombia to expand its service worldwide, reported La República. New workers will be located in Bogotá, Cali, Medellín, Barranquilla, and Bucaramanga.
  • Digital. Bradesco, Brazil’s second-largest private bank, launched new digital wallet  BITZ. The bank plans to invest BRL 100 million in the service over the next year, aiming to grab 20 to 25 percent of the digital wallet market by 2023.
  • Open banking. Fintech Quanto, specializing in providing API solutions for financial services, raised USD 15 million in its first investment round, luring Brazil’s two largest banks: Itaú Unibanco and Bradesco. Funds Coatue and Kaszek Ventures also chipped in. The round happened as interest for open banking is going up, weeks before regulations of these services will be enforced in Brazil. Quanto plans to use the money for recruitment and expedite product development.   
  • Data protection. A group of legal scholars will present a project to the Brazilian lower house, pushing for regulations on Article 4 of the General Data Protection Law (LGPD). The article concerns data protection for police investigations and security and national defense purposes. The group’s main concerns are over how facial recognition technologies will be used and the parameters used to determine when authorities can access people’s private WhatsApp messages.    
  • Apps. Initially conceived to reward users for the time they spent in traffic, Peruvian app Gózzalo found a way to reinvent itself before launch — and now is granting rewards for people who stay at home in Lima. Users who have remained within the same 100-meter radius get discounts in 100 companies. So far, the app has 2,500 active users, but aims to expand to the cities of Piura, Arequipa, Trujillo by the end of the year. 
  • 5G. A new report by telecom giant Ericsson estimates that, by 2030, digitization will generate BRL 391 billion in revenues for Brazilian companies — BRL 153 billion coming just from advantages brought by 5G technology. Being a 5G provider, Ericsson is not an unbiased player, of course.[/restricted]
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Tech

Remote working and distance education skyrocket in Latin America

During the first months of lockdown, the world was paralyzed or dramatically slowed down physically, but not virtually. According to the latest study the Economic Commission for Latin America and the Caribbean (ECLAC) made about the need for universalizing access to digital technologies to address the consequences of the pandemic, website traffic, and the use of applications for remote working or distance learning, there was a tremendous increase in the use of digital platforms. 

Between the first and second quarters of 2020, remote work surged by 324 percent while distance education rose more than 60 percent in Argentina, Brazil, Chile, Colombia, and Mexico. All providers of collaboration and video conferencing platforms benefitted from the immense rise in users.[restricted]

Zoom, for instance, confirmed on August 31 that it was one of the biggest corporate winners from the coronavirus crisis, as the video conferencing service reported a surge in new business in the three months to the end of July. It reported second-quarter revenues of USD 663.5 million, up 355 percent from last year. Since the start of the pandemic, the platform has been working on converting the mass of free users into paying customers.

But in general usage of Zoom is impressive: it has grown from 10 million daily meeting participants per day in December 2019 to some 300 million in April 2020. Also, daily active users of its mobile app are up an astonishing 1,761-percent year-on-year and 799 percent over the previous quarter. New installations are up 319 percent over the second quarter of 2020.

Zoom told LABS that in Brazil, it saw a 31-fold growth in free users signing-up in April compared to January 2020, while the number of paying customers with more than 10 employees in the country tripled. In Mexico, over the same period, there was a 49-fold growth in the number of free users signing-up, and the number of paying customers with more than 10 employees doubled. 

Overall, Zoom has seen an increase in paying customers, according to its latest quarterly report, with approximately 370,200 businesses clients with more than 10 employees, an increase of approximately 458 percent from the same quarter during the last fiscal year. And the number of large customers — those generating more than USD 100,000 in revenue in the past year – more than doubled to 988 during the fiscal second quarter.

Google Cloud partnered up with Latin American businesses and organizations

Google Meet reached a peak of over 600 million video conferencing participants during a single week globally in the quarter ending in June. At the end of April, according to the company, 2 million new users were connecting to Google Meet daily, spending over 2 billion minutes together — which equates to more than 3,800 years of meetings in a single day. And, of course, it’s not just about work: 41 percent of people increased the frequency of conversation with friends and family, according to a Google Cloud survey.

The search-engine giant cites several cases that demonstrate how its Cloud division kept Latin American businesses and organizations connected and running during the most severe periods of quarantines and lockdowns.

Before the government encouraged remote work across the country, one of Mexico’s largest insurance companies, the National Provincial Group (GNP), implemented a strict home-based policy. The company has developed a series of new procedures and practices in which 6,700 employees use Google Meet for video conferences and G Suite’s collaboration features.

In Peru, the Judiciary has used Google Meet to continue operating during quarantines. Mexico’s Milenio Televisión chose Google Meet to continue broadcasting some of its main TV shows away from its studios. And in Brazil, early in the pandemic, São Paulo’s Hospital das Clínicas partnered up with Google and Loud Voice Services to develop a voice assistant that manages appointments, exams, and medicines stocks using solutions such as Dialogflow and Speech API. 

With the increasing demand for these services, the company announced in June a new Google Cloud region in Santiago — which would be the company’s second region in Latin America, after São Paulo. “In this new region, companies from around the world will be better able to reach their users in Latin America”, said Google Cloud’s president for Latin America, Eduardo López.

Remote work: Microsoft beefs up Teams

The number of calls made using Microsoft’s Teams video conferencing software surged by 1,000 percent in March as people collaborated online due to the coronavirus pandemic. Teams users also generated more than 5 billion meeting minutes in a single day in the second quarter of 2020. 

“Microsoft Teams is helping people be together, even when they are apart. It’s the only solution with meetings, calls, chat, content collaboration with Office, and business process workflows — in a secure, integrated user experience”, said Satya Nadella, Microsoft’s CEO, during the company’s latest quarterly earnings conference call.

Sixty-nine organizations have more than 100,000 users of Teams, and over 1,800 enterprises have more than 10,000 users of the platform.

Here are some of the trends among Latin Americans using Microsoft tools: in Mexico, 41 percent of the calls use video; in Chile, the rate sits at 52 percent. These are lower rates than in Norway and the Netherlands, for example, where they reach 60 percent, but higher than the U.S. (38%), France (37%), and Singapore (26%). “The cultural aspect will always be relevant in how much people want to expose themselves”, Loredane Feltrin, director of Modern Workplace at Microsoft Latin America, told LABS.  


This article on remote work was originally published on LABS – Latin America Business Stories, a news platform covering business, technology, and society in the region for an English-speaking audience.

https://labs.ebanx.com/

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Tech Roundup: Is Telegram a threat to WhatsApp’s reign in Brazil?

You’re reading The Brazilian Report’s weekly tech roundup, a digest of the most important news on technology and innovation in Brazil. This week’s topics: the escalating war between Telegram and WhatsApp; moves in the fintech sector; the push for dropping payroll taxes on ICT firms.

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Telegram is stealing WhatsApp’s thunder in Brazil

Russian cloud-based messaging app Telegram used to be a “just-in-case” app for Brazilians, downloaded only when courts would temporarily block Facebook-owned WhatsApp Messenger. [restricted]However, Telegram is now the app with the fastest-growing popularity among smartphone users, according to a new poll by website Mobile Time and pollster Opinion Box.

  • Twelve months ago, Telegram was present only on 19 percent of  Brazilian smartphones. Now, it has been downloaded on 35 percent of devices.
  • Data from market research firm 42matters corroborates these findings. It places Telegram as the second most-downloaded communication app on Google Play (up two positions). It ranks in the fourth position among social-networking apps on Apple.

Niche. Telegram is more popular among men, people aged between 30 and 49, and wealthier Brazilians.

  • Telegram is making strides among financiers, with multiple channels being used to debate marketing trends. A channel belonging to InfoMoney, a finance website belonging to brokerage firm XP, has over 130,000 members.
  • Unlike WhatsApp, Telegram users are not too keen on interacting with brands or making purchases through the app.

Channeling attention. Telegram channels — similar to WhatsApp groups — are its most popular feature. “Limits on forwarding messages imposed by WhatsApp may be attracting users to Telegram, due to the app’s flexibility.”

  • Earlier this year, Whatsapp restricted forwarding messages to more than one contact, in an attempt to limit the spread of disinformation.

By the way … 76 percent of WhatsApp users believe the app should share personal data belonging to people who spread disinformation with authorities — something that goes against the principles of new General Data Protection Law.

  • Interestingly, though, one-third of respondents admit to sharing news content without verifying their authenticity.
  • As the November municipal elections draws closer, debates on disinformation may return to the headlines. This week, House Speaker Rodrigo Maia said a new bill on fake news spreading may be up for vote in the next month.

David v. Goliath. Despite the growing popularity, Telegram is still a long way from taking WhatsApp’s pole position: 95 percent of users who downloaded both apps use the latter more frequently.

  • The pandemic has boosted WhatsApp’s numbers, as users engage more with video and audio calls.

Nubank sets foot on investment market through acquisition deal

Nubank announced today the takeover of online investment platform Easynvest for an undisclosed amount. The move marks Nubank’s third acquisition in the year and its first foray in the investment arena, an effervescent market in which the bank’s competitors have already taken a sizable lead.

Why it matters. Financial markets are expanding in Brazil, which is also making competition fiercer (sometimes even among players under the same parent group).

Newcomers. Nubank is behind its competitors such as digital bank Banco Inter — which already offers brokerage services. However, Nubank seems keen on challenging the competition through “democratic and accessible investment solutions.”

  • With 1.5 million customers and roughly BRL 20 billion in assets under its control (AUC), Easynvest gives Nubank a strong starting point. More importantly, it increases the portfolio Nubank can offer to its nearly 30 million clients.
  • Still, Nubank will have to work hard to catch up with sector leader XP, which currently has 2.36 million customers and BRL 436 billion in AUC. 

Room for all.  Brazilians’ increasing appetite for riskier investments may give Nubank a new cash cow. In Q2 2020, Banco Inter booked 762,000 active customers on its brokerage platform, a 180-percent increase in a year. Now, the segment makes up for 13 percent of Inter’s customer base.


Brazil’s ICT sector in a tug of war with the Economy Ministry

In August, President Jair Bolsonaro vetoed a bill extending until December 2021 payroll tax exemptions to 17 sectors — including ICT companies. The decision sparked a major outcry from business owners, who found support in Congress. Lawmakers are expected to strike down the veto, in a push led by Senator Eduardo Gomes — the government’s whip in Congress.

No cash. Payroll tax exemptions lift firms’ obligation to pay the equivalent of 20 percent of salaries to social security funds. Instead, companies would have to pay a single levy calculated based on their gross revenue. For the ICT sector, the rate reaches 4.5 percent.

  • The already cash-strapped administration says it can’t waive the around BRL 5.7 billion in revenue.
  • ICT companies however, claim the exemptions would help them create over 300,000 jobs over the next five years.

Gold mine. The solution may be an old acquaintance of previous administrations, the Fund for Universalizing Telecommunications Services (Fust). 

  • Currently, the fund’s resources (estimated at BRL 22.6 billion) are directed to financing fixed-telephony projects and is frequently used to pay for part of the public debt.
  • The Federal Accounts Court — a sort of audit tribunal that monitors public spending — believes that only 1.2 percent of the money has been used so far.
  • Earlier this week, Senate President Davi Alcolumbre said he aims to vote on a bill unlocking FUST funds to extend broadband access in public schools.

Take Note

  • 5G. Communications Minister Fabio Faria promised that the auction of 5G frequencies in Brazil would take place in “April or May 2021.” The decision comes after the pandemic has delayed technical studies for the feasibility of 5G projects and increased the need for internet connections in the country, as we explained in our September 11 Daily Briefing.    
  • Data protection. Chile’s state-owned BancoEstado suffered the biggest ransomware attack in the country’s history this week. Roughly 15,000 computers were hijacked, prompting the closure of the bank’s 416 branches. Local media reports that the only reason why customers did not lose money was that the bank’s managers literally plugged off the servers, causing severe service disruptions all over the week. The case prompted calls for the revamping of cyber laws in Chile.  
  • Investments. Chilean startup NotCo, specialized in plant-based food, raised USD 85 million in an investment round led by Future Positive and L-Catterton. The company now aims to enjoy the advantages it has gained during the pandemic – as its only sales increased to 40 percent of overall revenue — and expand its footprint in Brazil and in the U.S.
  • Research. Brazilian researchers found a way to produce hand sanitizers using cellulose products. The study aimed at finding replacements for carbomer 940, a thickener imported from China. They came up with three cellulose products that can provide the gel texture without harming the alcohol’s bactericidal properties; the findings are now available for the public on this link.
  • E-learning. The lack of internet access is preventing children from getting education in Peru. According to a special report by newspaper El Comércio, 45 percent of Peruvian schoolchildren are lowering their attendance in online classes. The problem is worse in rural, remote areas, where only 5.6 percent of the population has internet access.
  • E-gov. The Brazilian government reached the mark of 918 digital services in 20 months — 345 of them launched amid the pandemic. The digitization process has saved BRL 2 billion and helped solve 88.6 million demands per year, without the need for displacements. So far, the administration has reached 60 percent of its goal of fully digitizing its 3,700 services offered by 2022.[/restricted]
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Tech

All-in-one technology to bring 4G to Brazil’s far-flung rural areas

Brazil’s National Telecommunications Institute (Inatel), a research and education center in the field of engineering, put the finishing touches on an innovative radio communication apparatus back in April. LTE Network-in-a-Box is capable of supporting private wireless networks in remote areas, using the Long Term Evolution (LTE) communication standard, better known as 4G.

These wireless networks allow for the transmission of data and voice, facilitating the connection of machinery and equipment and the digital transformation of various areas of business, such as agricultural production, sugar and ethanol plants, miners, energy concessionaires, and oil and gas infrastructure companies. Even public security forces deployed in regions that do not receive service from telecom operators may benefit from the innovation.[restricted]

LTE Network-in-a-Box was created in three different versions, to operate on the 250 megahertz (MHz), 700 MHz, and 1,800 MHz frequencies. The lower the frequency, the higher the signal reaches; in ideal conditions, a 250 MHz transmission may reach up to 100 kilometers, while one on the 1,800 MHz frequency can reach 5 km. According to Henry Rodrigues, technology and innovation coordinator of Inatel’s Radio Communications Reference Center (CCR), the 250 MHz version is the most developed. It is currently in the final stages of validation tests and a contract has been signed with an undisclosed partner to manufacture and sell the product.

Mr. Rodrigues believes this 250 MHz version will attract the most attention from the market due to Brazil’s telecoms regulations, which allow companies to operate on this frequency by way of a Limited Private Service license from the Brazilian Telecoms Agency (Anatel). In order to work with the other spectrum bands, public tenders are necessary. Bidding processes for the entire 4G spectrum began in 2012 and were awarded to mobile phone operators, which use equipment from multinational firms Nokia, Ericsson, and Huawei.

A private LTE network can work as a closed circuit — like an intranet — or it may have an entry point for an internet signal obtained via satellite, cable, or point-to-point radio linkups. Inatel’s technology manages to bring together the two functionalities of an LTE network in a single box. The first is as a base station, which is the fixed access network used to capture and retransmit the signal of connected devices. The other use is as an integrated network core, which controls base stations. “With most equipment available on the international market, these two functionalities work separately,” explains Mr. Rodrigues. “In our solution, the network core functions are carried out by software embedded in the base station.”

Another characteristic of LTE Network-in-a-Box, according to the CCR coordinator, is the ease with which it can handle the constant updating of technology. “In the future, users of LTE Network-in-a-Box that want to migrate to 5G will just have to update the software. They won’t need to swap out the equipment,” Mr. Rodrigues affirms.

The pioneers of the CPqD

Equipment for LTE networks to serve remote areas have also arisen as an innovation on the international market and must be developed in accordance with the frequencies available in each country. In most Latin American countries, the 450 MHz frequency is used in these far-flung areas. This particular band was also initially selected by Anatel and was set to be bundled into 4G auctions, though courts dismissed this requirement when companies showed no interest in the tender. The alternative was to use the 250 MHz frequency, regulated by Anatel for private networks by way of Limited Private Service licenses.

The first equipment for rural LTE networks in Brazil was designed for the 450 MHz frequency by researchers from the Telecommunications Research and Development Center (CPqD) in Campinas in 2012, before being transferred to its commercial partner Trópico Telecomunicações. 

According to Armando Barbiero, Trópico’s product marketing manager, a second 700 MHz version — with a reach of between 10 and 15 km — was developed to fulfil a request from the Brazilian Army. It was used in an exclusive defense and public security network to monitor events in Brasília related to the 2014 Olympic Games. A third version, in 250 MHz, allowed the São Martinho sugar and ethanol factory to connect 2,000 agricultural vehicles in its productive facilities in the state of São Paulo. “We already have contracts with another four agribusiness clients and one in the area of railway logistics,” says Mr. Barbiero.

Paulo Bernardocki, head of products and technology at Swedish telecoms firm Ericsson, says that after focusing on the smartphones market, telecoms operators are now increasing their commercial efforts to meet the demand of private LTE networks, offering the frequencies they obtained in bidding processes. One example of this is the agreement for telephone operator Vivo to implement LTE networks at all facilities belonging to Brazilian mining giant Vale. Beginning with the Carajás mine in the northern state of Pará, the move allows for the remote operation of trucks and drilling rigs. The existing network in Carajás was implemented by Finnish company Nokia. “The advantage of telecom companies is that they have expertise in the construction and operation of 4G networks, and a vast team to quickly solve problems that may arise,” the executive says.

According to Mr. Bernardocki, the interest in private LTE networks is justified in a country that is so expansive and has many areas without adequate telecoms coverage. However, the migration to 5G is inevitable. “The transmission speed is 100 times faster, and the latency — the response time for a given demand — is five milliseconds, one-tenth [of the time required] for 4G,” the executive explains. These characteristics are set to open up the possibility of new technological architectures. “We’re going to have drones with cameras flying over plantations, processing the image in the cloud, identifying diseases, using artificial intelligence and spraying [pesticides] in a single flight, before going back to base,” Mr. Bernardocki forecasts.


This article was originally published by Revista Pesquisa Fapesp

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Tech

Tech Roundup: Brazilian giants on startup-hunting spree

You’re reading The Brazilian Report’s weekly tech roundup, a digest of the most important news on technology and innovation in Brazil. This week’s topics: Brazilian big retailers on startup-hunting mode; old problems prevent Brazil from becoming a leader in innovation; and how poor internet access is increasing inequality in Latin America. 

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Amid e-commerce boom, big retailers hunting for startups

This week, two e-commerce giants went shopping[restricted] in the local startup market, as the battle for dominance in a burgeoning sector becomes fiercer by the day. On Tuesday, Mercado Livre announced it had acquired a minority stake in last-mile logistics startup group Kangu, after a year of using its services. Two days later, Magazine Luiza made its entry into the food delivery market, purchasing startup AiQFome. 

  • According to a report by Distrito.me, big companies were responsible for 58.1 percent of 44 startup mergers or acquisitions reported in H1 2020. The number is almost 52 percent larger than 2019 rates.
  • Still, investments halved to USD 691.7 million — a sign that companies may be beefing up their portfolios at a lower cost amid the crisis.

Last-mile meets click-and-collect. Mercado Livre’s investment in Kangu is part of its strategy to reduce its reliance on state-owned postal service Correios, a company riddled with crisis and currently facing a nationwide strike.

  • But Kangu is also a gamble on improving the consumer experience. The startup connects customers to small brick-and-mortar shops near their homes, giving Mercado Livre a way to implement click-and-collect delivery modes. So far, that strategy has been a competitive advantage of traditional retailers such as Via Varejo and Magazine Luiza.

Super-apps. Magazine Luiza openly talks about its aspiration of becoming “Brazil’s Amazon Inc.” Startup AiQFome will be the first food delivery service on its one-stop-shop super-app, which already includes e-commerce household names such as Netshoes (sporting goods and footwear), Zattini (clothing), and Época Cosméticos (cosmetics). The goal is to increase customers’ recurrent use of the app. 

  • AiQFome has 2 million customers and 17,000 restaurants in 350 cities, generating BRL 700 million in revenue. Unlike services such as UberEats or iFood, the platform only connects customers with restaurants who take care of delivery themselves. 

Brazil rises in Global Innovation Ranking, but still below 2011 levels

The Global Innovation Index (GII) released by WIPO puts Brazil as the 62nd most-innovative economy globally, gaining four positions in comparison to 2019 levels. Despite the improvement, the country is still far below its 2011 peak, when the country sat in 47th — a sign of the country’s underwhelming ability to innovate and produce.

Where Brazil stands. Latin America’s biggest economy ranks 16th among 37 upper-middle-income economies. It is also the fourth most-innovative Latin American nation, behind Chile, Mexico, and Costa Rica. Per WIPO, Brazil’s performance matches expectations for its level of development, relative to GDP, compared to the 131 economies analyzed.

Old habits. According to WIPO, Brazil produces fewer innovation outputs relative to its level of innovation investments. The main problems are hardly new issues:

  • It is hard to start a business;
  • There’s a lack of graduates in science and engineering, poor performance in primary education (as seen on the PISA test);
  • Suboptimal levels of general infrastructure and low indicators of gross capital formation;
  • Difficulties to get credit and high bank fees;
  • Sluggish growth of public-private partnerships;
  • Poor performances from national feature films and printing and other media.

Who will fund innovation? The theme of this year’s GII report presents a challenge for Brazil, as noted by the president of the National Confederation of Industry, Robson Braga de Andrade.

  • “The fiscal crisis jeopardizes the progress made by different governments in recent decades. The level of public investment in R&D is lower than it was 20 years ago, and many of the public policies for financing innovation are decreasing or at risk of suspension,” he wrote.
  • Brazil’s 2021 budget proposal, submitted this week, foresees only BRL 96 billion for non-mandatory expenses, including research grants. The amount is below the BRL 100 billion necessary to avoid a shutdown or freezing, as seen in 2019.   

Latin America’s lack of internet access increases inequality during pandemic

The high level of informality in Latin America’s job market and poor internet access prevents more people from working from home during the pandemic, expanding the inequality in the region, according to a report by the Economic Commission for Latin America and the Caribbean (ECLAC). Only 21.3 percent of Latin American workers were in a position to perform their activities remotely. In Brazil, that percentage rises to roughly 25 percent.

  • Still, remote work solutions increased by 324 percent in the second quarter, while online learning increased 60 percent versus Q1 levels.
  • As of 2019, only two-thirds of Latin Americans had internet access; in higher-income households, that share rises to 81 percent, while it plunges to 38 percent among the poorest sections of the population.

“Offline” learning. As of June, 44 percent of Latin American countries experienced average internet speeds inferior to 25 Mbps, preventing users from performing multiple tasks simultaneously. As a result, say the researchers, people had to choose between online work or learning.

  • To make things worse, 46 percent of Latin American children aged between 5 and 12 — a total of 32 million youths — live in homes without an internet connection.
  • Among higher-income students, 70 to 80 percent have laptops, while only 10 to 20 percent of lower-income students own such devices.  

Trends. Despite the struggle, the digitization of Latin American economies during the pandemic is remarkable. From March to April 2020, the number of corporate websites skyrocketed by 800 percent in Colombia and Mexico, while Chile and Brazil experienced a 360-percent increase. 

  • To support that trend, the ECLAC suggests creating a “digital staples basket,” granting a laptop, smartphone, and tablet to homes that do not have such devices. According to the study, most Latin American countries would spend less than 1 percent of their GDP to afford such a program, with the exception of Bolivia and El Salvador.

Take note

  • Payment methods. A report by Kantar showed that, in the second quarter, the use of credit cards grew by 13 percent in Colombia, reaching a 27-percent market share in the payment methods market, the best performance in Latin América. However, in Mexico, credit card use dropped by 10 percent, to a 36-percent market share.  
  • Fundraising. Fintech Neon Pagamentos raised BRL 1.6 billion on a C-series investment round led by General Atlantic. The company also attracted new investors such as Black Rock, Vulcan Capital, PayPal Ventures, and Endeavor Catalyst. After experiencing a 26-percent jump in the number of users since March, the company now aims to use the money to escalate its credit offer and expand products for individuals and individual entrepreneurs.
  • Telecom. President Jair Bolsonaro signed a decree regulating the “Antenna Law” this week. As we anticipated in last week’s Tech Roundup, the measure was highly awaited by the private sector, as it allows companies to move forward with the installation of antennas if municipal administrations do not greenlight operations within a period of 60 days. Plus, antennas smaller than 3-meters tall will no longer require licenses, which means that up to 90 percent of the equipment required for 5G signals will not face bureaucracy barriers.
  • E-government. The Brazilian Senate approved a provisional decree that makes it easier to have access to public services using digital signatures. Besides public key infrastructure (PKI) issued by accredited companies — known as qualified signatures — the government will now accept simple and advanced digital signatures. The first applies to situations that do not include sensitive information, while the latter only requires users to confirm their identity. The federal government believes that Brazilians will be able to access 48 percent of services with a simple signature.[/restricted]
Categories
Tech

Tech Roundup: The end of the Data Protection Law soap opera?

You’re reading The Brazilian Report’s weekly tech roundup, a digest of the most important news on technology and innovation in Brazil. This week’s topics: the long path to enforce a new data protection law, Brazil’s connected city woes, and the unprecedented boost for e-commerce. 

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Two years on, data protection law to go live. What now?

After two years of hemming and hawing, [restricted]Brazil’s Congress has finally approved the new General Data Protection Law (LGPD), which will come into force within two weeks. However, legal battles surrounding the regulations are far from over, and there is much to be done before sanctions may be applied in 2021.

ANPD. Soon after Congress’ decision, President Jair Bolsonaro issued a decree finally creating the National Data Protection Agency (ANPD), which will serve as the watchdog and sanctioning body for the LGPD. However, experts complain that the new regulator may suffer from a severe lack of autonomy. 

Breaking it down. According to lawyer and Digital Law specialist Alisson Possa, the main problem is that the president will be able to remove members of the ANPD board by way of administrative procedures. 

  • “The main problem is not in the nomination process, as board members are appointed by the president, but approved by the Senate. The problem is in removing them: the president can strip a board member from his/her job and put them on ‘trial’ following an administrative process. This gives too much power to the president,” he tells The Brazilian Report
  • Experts point out that the ANPD will not be a standalone agency, being subject to the President’s Office, thus diminishing its independence.

More to come. Besides the LGPD, organizations from the sector support the approval of Constitutional Amendment Bill (PEC) 17, which establishes data protection as a constitutional right. 

  • In its current form, PEC 17 would also allow for the reformulation of the ANPD, as it demands the data protection watchdog be fully independent to ensure data privacy as a fundamental right. 
  • The LGPD also states that any changes to the ANPD’s legal status should take place over the next two years.  

Brazil struggles to create connected cities

Though Brazilian cities are moving forward with various connectivity projects, a recent report from an association of telecom providers shows that advances are being hindered by time-consuming red tape in the installation of antennas. 

  • In an event to present its annual ranking of Brazil’s most “internet-friendly” cities, sector representative Marcos Ferrari highlighted that the cities with the best performance were those which reduced bureaucracy and updated their infrastructure frameworks.

Why it matters. Brazil currently has roughly 100,000 antennas, but it would need to double this number in the next four years to enable the use of 5G technology.

Leaders. São José dos Campos, a mid-sized city in the state of São Paulo, is Brazil’s most internet-friendly city for the second straight year. Santo André, also in São Paulo, led the intelligent services ranking, offering digital services for 20 of the 26 categories studied.

Lagging behind. Surprisingly, the country’s major state capitals seem to be in a race to the bottom. Belo Horizonte tanked, falling to 92nd place overall, while Brazil’s biggest city São Paulo came in at 98th. Brasília, the capital built from scratch just 60 years ago, was also in the bottom end. It has just approved its own law to regulate antennas. 

Regulation. While Brazil’s current regulatory framework is good, it is not enforced. A 2015 bill established that cities must assess requests for antenna installations within 60 days, but this process can last up to a year in major urban centers such as São Paulo. The federal government wants to pass a rule establishing that a lack of response from municipal administrations constitutes tacit approval.

Impact. Brazil’s Deputy Telecoms Secretary Artur Coimbra estimates that properly enforcing the law could generate up to BRL 3 billion in investments within a year.


Brazilian e-commerce has best six months in 20 years

With a 47-percent increase in revenue as a result of social isolation, Brazilian e-commerce managed to raise BRL 38 billion in the first half of 2020. According to a Nielsen report, this was the best six-month performance for the sector in 20 years. The performance was boosted by a 39-percent bump in purchases — now at almost 91 million — and an increase in the average order price.

Heavy users. The number of online shoppers in Brazil rose 40 percent, but this was not the main reason for the sector’s success. Instead, the report suggests that people already accustomed to buying goods digitally are becoming even more loyal to e-commerce and contributed to 82 percent of the H1 2020 growth.

Next frontier. The Southeast, Brazil’s richest and most populated region, accounted for 47 percent of the e-commerce growth in the country. However, the North and Northeast areas combined were responsible for one-third of the revenue growth in H1 2020. Online sales grew an impressive 107 percent in Northeast and 93 percent in the North, the highest rates nationwide.

Yes, but … The unexpected increase in sales has also exposed logistic issues, with 14 percent of orders arriving late. 

  • One of the main bottlenecks is the so-called “last mile of delivery.” To get around the issue, Germany’s DHL Express started a pilot project in August to integrate delivery services with self-service lockers in subway stations, with customers able to pick up orders themselves.

Take note

  • Proxy. Personal finance app Guiabolso is allowing users to make instant wire transfers between banks, for free, on a 24/7 basis. The functionality mirrors PIX, the Central Bank’s instant transfer system set to be launched in November. The platform will reportedly adopt PIX once it is up and running, in an attempt to compete with banks. Guiabolso now aims to consolidate several functions within its app, such as financial management, a marketplace, and payments. 
  • Beauty-tech. Startup JustForYou — which uses AI to create shampoos and hair conditioners according to people’s own physical specificities — received investment from Neuron Ventures, a venture capital fund sponsored by drugstore chain Eurofarma. The undisclosed amount will be used to increase its product portfolio, expand the lab, marketing, and customer wellness, which the company hopes will drive its revenues up by 150 percent. 
  • Cybersecurity. Research by cybersecurity company Akamai Technologies indicated that 43 percent of Brazilian bank customers are now using digital banks — twice the amount of last year — and are increasingly concerned about data security. Fifty-seven percent of interviewees said they check the bank’s background on security breaches before opening an account and, for one-third, this information proved to be a decisive factor to become a customer. [/restricted]
Categories
Tech

Latin American techs leaving commodities in the rearview mirror

In the first week of August, Argentinian online marketplace firm Mercado Libre became the most valuable company in Latin America, with its USD 60.6 billion market cap taking the crown from Brazilian miner Vale. That a tech-based company would be worth more than a firm based on extracting and producing commodities is a symbolic shift in the region, similar to what was seen in 2011 in the U.S., when Apple surpassed ExxonMobil for the first time.

Publicly traded on Nasdaq, Mercado Libre achieved [restricted]excellent results in Q2 2020, with its shares appreciating 101.8 percent in value between April and June. E-commerce has experienced a significant uptick during the Covid-19 pandemic, with countries around the world closing their in-person economies during isolation measures. But this trend has influenced the tech sector as a whole, with a number of Brazilian firms seeing notable rises in stock prices since March.

Web hosting company Locaweb — which went public in February of this year — saw shares rise 142 percent between March and late August. Software companies Linx and Totvs enjoyed their own 49- and 45-percent increases in stock prices. Along with a host of tech-related firms, they outperformed Brazil’s benchmark stock index Ibovespa, which has risen 23 percent since social isolation measures began in the country.

Experts believe that the shift to tech witnessed during the pandemic is set to persist long after the health crisis subsides, spelling good news for technology firms.

“This is not isolated growth, restricted to Mercado Libre, for example, or specific to this moment. I believe it is a transformation that is here to stay, even though the intensity may decrease as time goes by,” says José Falcão, a variable income specialist at broker Easynvest.

“Companies that had plans to expand online sales have advanced a lot during the coronavirus crisis,” he explains. “People were ‘forced’ to change their habits and make more online purchases, even though that possibility already existed.”

Analysts say investors have begun to view the technology market as a more resilient sector in the short term, suffering less impact on revenues. Consequently, they started to add technology companies to their portfolio, even though Brazil and other Latin American countries’ expertise traditionally lies in commodities.

Is it worth investing in Latin American tech firms?

Alexandre Marquesi, professor at the São Paulo-based Escola Superior de Propaganda e Marketing (ESPM), points out that the success of e-commerce was best achieved by those that had already adopted a strong strategy in this realm. “Mercado Libre did not appear overnight. It is over 20 years old, has undergone several transformations and its most expressive growth comes from the last four, five years,” he says.

Meanwhile, professor Emanuelle Nava Smaniotto, from Unisinos, says that while these companies will have good projections of future returns, the market is uncertain and all firms are subject to systemic risks.

“Certainly more traditional and consolidated companies, for whom the market is well defined, do not carry out as many reinvestments and distribute dividends, and those may be less risky to invest in. Tech companies, on the other hand, are constantly reinvesting for innovation and, with good market prospects, they certainly have projections for greater returns,” she says.


This article was originally published on LABS – Latin America Business Stories, a news platform covering business, technology, and society in the region for an English-speaking audience

https://labs.ebanx.com/

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Categories
Tech

Tech Roundup: How Brazilian e-commerce survives postal workers strike

You’re reading The Brazilian Report’s weekly tech roundup, a digest of the most important news on technology and innovation in Brazil. This week’s topics: the impacts of a postal workers’ strike on Brazilian e-commerce; TikTok cozying up to Brazilian payments platform PagSeguro; a new bill to curb legal battles between telecom operators and watchdog Anatel.

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Is Brazilian e-commerce threatened by postal workers strike?

At a time Brazilian companies are heavily relying on e-commerce to make up lost revenue amid the pandemic, [restricted]a strike among workers of Correios — the state-owned postal service — is no minor inconvenience. However, vendors are now much less dependent on the nationalized company than they were just a few years ago.

What is happening. Employees at Correios started a nationwide strike on August 17, saying the company unilaterally revoked labor benefits such as maternity leave, or pensions to families in the case of death. They also ask for better work conditions during the pandemic. 

  • Workers unions claim 70 percent of the workforce has joined the strike, while Correios says the actual number is around “just” 20 percent. The company also said it is adopting contingency plans to keep operations flowing.

The impact on companies. A report by finance website 6minutos shows that, in 2016, 95 percent of small- and medium-sized businesses relied on Correios for logistics. Four years later, research from e-commerce solutions provider Preço Certo puts this rate around 60 percent. Still big, but much smaller.

Winners. Logistics startups have been popping all around Brazil and have stolen market share from Correios. According to Preço Certo, private operations are growing in importance, with new players such as startup JadLog already gobbling up 11 percent of the market. 

  • In urban centers, Correios face an additional competing segment: ride-hailing apps which saw delivery as a new niche. Giants such as Uber and 99 have turned drivers into couriers during the pandemic.

The Amazon effect. Brazil’s largest retailers are even less dependent on Correios. Most of them have adopted the Amazon model and created their own logistics networks. Magazine Luiza, whose e-commerce sales jumped by 182 percent in Q2 2020 — accounting for nearly 80 percent of overall sales — has converted stores in storage centers and beefed up its logistics network by acquiring startup LogBee. Per finance magazine Exame, Magazine Luiza’s fleet now has over 4,000 micro-transporters and drivers.

Is this the end for Correios? Not so soon. The company remains a major force, especially outside of major Brazilian urban centers. It is the only postal service to reach roughly 2,000 cities around the country.


Fintech meets social media: TikTok partners with PagSeguro

After WhatsApp Pay, TikTok is next in line to mix social media and finance: the Chinese app struck a deal with Brazilian fintech PagSeguro to allow users to receive money earned in the app online.

How it will work. TikTok users will be able to transfer money they receive by getting their friends to link their apps to PagBank, PagSeguro’s digital bank. From that point on, they will be able to pay their bills, charge prepaid cell phones, and even withdraw money from ATMs.

Business prospects. With over 2 billion downloads worldwide, TikTok is expanding in Brazil. Market research company 42matters listed it as the country’s third most-downloaded free app — and the fourth-highest grossing app. 

  • It remains unclear if the partnership will give PagSeguro access to TikTok’s international base of clients.

Top apps in Brazil

tiktok brazil pagseguro e-commerce
Source: 42matters

Laying low. So far, ByteDance — TikTok’s parent company — managed to stay away from local politics. But it hasn’t escaped controversy. U.S. President Donald Trump threatened to ban the app unless it was purchased by an American company. Soon after, Congressman Eduardo Bolsonaro, President Jair Bolsonaro’s son, called the app “a danger.”

  • Earlier this year, reporter Lucas Berti showed how Brazilian far-right discourse has found in TikTok a fertile ground for conspiracy theories.
  • Another Chinese giant, Huawei, has been affected by the U.S-China tech war. As we reported in our August 6 Daily Briefing, Communications Minister Fabio Faria started talks with 5G providers … but his meeting schedule did not include a sit-down with representatives from Huawei.

New bill wants to turn legal grievances into telecom investments

As Brazil grapples to boost telecom infrastructure investments, a new bill presented in the lower house wants to allow operators to convert fines of up BRL 50 million into infrastructure investments. The goal is to diminish long legal battles and improve the quality of services, says Congressman Marcelo Brum, who sponsors the bill. 

How it would work. Bill 4225/20 plans to change the National Telecommunications Law, turning fines for irregularities into investments, especially in rural areas. This would be possible through an agreement with Anatel, the sector’s regulator, obeying the following criteria:

  • Collective bargaining agreements (CBAs) would have to include a timetable to make sure the investments would be fulfilled;
  • Companies would not be able to sell new phone numbers if they fail to comply with the agreement.

Previous results. Since 2014, regulators have used CBAs as a way to beef up investments — but it wasn’t until June 2020 that the first one came into existence.

Why it matters. Telecom providers have been among the leaders in complaints in customer protection services for years, accounting for 10 percent of all customer grievances in the country. Fines applied to Anatel often lead to long legal battles and few are actually paid.


Take note

  • Angel investment. Brazilian online event startup Congresse.me raised BRL 1.1 million in an investment round led by Investidores.vc and Gávea Angels. The company surfed on the boom of online meetings and, so far, has already organized over 100 events in 2020, up from 25 in all of last year; the goal is to reach 200 by the end of the year. Congress.me now intends to invest the money to hire new employees, invest in technology and open new commercial fronts, it tells The Brazilian Report.  
  • Capitalization. WDC Networks, one of the biggest optic fiber equipment providers in Brazil, is preparing a BRL 1 billion capitalization with investors, after the Covid-19 pandemic derailed its plans for an initial public offering, reports finance website Brazil Journal. The company provides fiber optic modems in a technology-as-a-service model, renting these routers to internet providers. The money, according to the report, would be used to expand the model.
  • Data protection. Congress postponed voting on a provisional decree which would push the enforcement of the Brazilian General Data Protection Law (LGPD) back to May 2021. Specialized media outlets have mentioned an agreement to create the National Data Protection Agency (ANPD) and approve Constitutional Amendment 17, which grants data protection as a constitutional right. However, time is running out; if it’s not approved by Congress until August 26, the provisional decree will expire.
  • Europe’s Enron. PagSeguro acquired Wirecard Brazil, the local subsidiary of Germany’s Wirecard, for an undisclosed amount. The payments processing company became notorious for an accounting scandal that led to insolvency and the arrest of its CEO. The bad reputation caused liquidity constraints to its Brazilian unit. The purchase grants PagSeguro Wirecard’s 200,000 customers and BRL 120 million in revenues, plus new functions for e-commerce such as splitting payments. The deal still requires regulatory approval.[/restricted]
Categories
Coronavirus Tech

Pandemic exposes ‘digital inequality’ in Brazilian internet access

Back in 2000, less than 3 percent of Brazilians had access to the internet. Nineteen years later, this has risen to 74 percent, according to data from the Regional Center for Information Society Studies (Cetic). That puts Brazil far ahead of the developing world (47 percent), as well as the global average (53.6 percent). However, access to the internet is by no means democratic — with coverage and quality varying greatly from area to area.

But with many Brazilians forced into confinement — and remote work — by the Covid-19 pandemic, a new form of ‘digital inequality’ became apparent.[restricted]

“In the North, entire regions depend on satellite connections, or mobile 3G and 4G. In the Southeast, on the other hand, fiber optic internet is widely available. That already separates these two regions when it comes to speed, quality, and stability of connections,” says Fábio Storino, who coordinates one of the most complete and respected technology surveys in Brazil, TIC Domicílios.

This inequality is exemplified by the household of 22-year-old Thamyres Talyne Oliveira da Silva, from the small northern town of Itaguatins. Her mother pays BRL 90 (USD 16.50) for 10 megabytes of data per month — but they have never had the opportunity to use their plan to the fullest. At most, they get around half of what they pay for. “When it rains, getting online becomes a challenge. And whenever we try to complain, we always get the same answer — ‘our engineers are performing maintenance in your region.’ Well, that ‘maintenance’ has been going on for the best part of the last two years,” Ms. Silva tells The Brazilian Report.

Purchasing power plays an important role when it comes to internet access. In Brazil’s socio-economic class structure, ranging from the wealthy class A to the impoverished class E, 99 percent of class A homes are connected to the internet; that rate falls to 43 percent for class E. 

“We have carried out our research for the past 15 years. And while we have seen an amazing evolution in Brazil, we still observe that poorer citizens are not a part of this. At least not in the same way as wealthier populations,” Mr. Storino explains.

Internet inequality: smartphones to the rescue?

The inequality of internet access would be much more profound in Brazil if it weren’t for smartphones. Of the 74 percent of Brazilians that have internet access, 58 percent go online exclusively via their cell phones. “Since 2015, smartphones are the main device used by Brazilians to connect to the internet. That rate jumps to 80-85 percent among lower-income users,” Mr. Storino explains.

At times when most schools remain closed, this disparity becomes even more harmful for lower-income students. After all, remote learning content on a smartphone screen with an inferior connection is a very different experience to consuming the same material on a desktop computer with high-speed internet.

During the pandemic, Brazil saw the rise of several initiatives aiming at providing quality access to the internet for public-school students. In many states, classes will not return until March 2021, and there is a real concern of skills being lost in the meantime.

The Education Ministry launched a public procurement process worth BRL 24 million (USD 4.3 billion) to distribute SIM cards with mobile internet data packages to 400,000 students in public universities and professional certificate courses. 

Nossa, an activist network for education initiatives, began a crowdfunding campaign to take 4G connections to low-income schools during the pandemic. Their goal was to raise BRL 100,000 (USD 18,200) for the “4G for studying” project — but they managed to raise six times that amount. “We helped 31 university preparation courses from ten states — and made sure that 4,600 students would have access to the internet for at least three months,” says Daniela Orofino, a 27-year-old student undertaking a master’s degree in information science, who spearheaded the project.

“The pandemic didn’t enhance internet inequality — it just made it visible,” says Ms. Orofino.

Besides private initiatives, there are at least two bills pending in the Senate which would give aid to vulnerable populations in order to guarantee access to the internet.

Experts believe that 5G technology would help mitigate these gaps. That is, depending on how it is regulated. However, Brazil is still lagging behind on the issue with the repeated postponement of public auctions for 5G frequencies, which are now set to be held early in 2021.[/restricted]

Categories
Tech

Tech Roundup: Brazilian Congress’ crackdown on online content

You’re reading The Brazilian Reports weekly tech roundup, a digest of the most important news on technology and innovation in Brazil. This week’s topics: Brazilian members of Congress resort to lawsuits to force the removal of content online; the country’s first ‘bug bounty’ startup; and a biotechnology firm introduces biological control to fight ticks among cattle. 

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One in three Brazilian lawmakers filed lawsuits to remove online content

Over one-third of members of Congress [restricted]have gone to court to request the removal of content from blogs, media outlets, and social media. The figure comes from a report by the Brazilian Association for Investigative Journalism (Abraji), in partnership with newspaper Folha de S.Paulo. 

By the numbers. Brazil has 594 members of Congress — 513 representatives and 81 senators. And 233 of them have filed a combined 479 lawsuits trying to strike down online content.

  • 354 cases came from lower house members, 293 of which were for “libel.”
  • 87 percent of lawsuits are against a journalism blog, media outlet, or social media profile.

Plaintiffs. Trying to use the justice system against unwanted reports is a move that is common to all sides of the political spectrum. There is no particular trend associated with either the left- or right-wing.

Why it matters. Congress is about to decide on the so-called “Fake News” bill — while clearly being interested parties in the discussion. Experts have warned that the bill raises serious threats to freedom of speech.

  • “If, in the absence of a law, many public agents resort to the Judiciary to request the exclusion of content in the virtual environment, the legal command to moderate content established by the [Fake News Bill] might be the definitive seal to weaken freedom of expression,” wrote Abraji lead counselor Juliana Fonteles.

Bill. After passing in the Senate, the “Fake News” bill is currently pending before the lower house. Speaker Rodrigo Maia, however, guarantees that the matter will not go to a floor vote before an extensive cycle of debates with experts and lawmakers. 


Brazil gets first “bug bounty” startup

Bug bounty programs are a way to “crowdsource” the hunt for vulnerabilities in online systems. Around the globe, thousands of organizations offer rewards to hackers, developers and researchers who are able to flag security flaws — allowing companies to fix them before major breaches occur. In Brazil, bug bounties are not common, with only one startup, BugHunt, present in the sector.

How it works. Hackers can sign up to the platform for free and choose a task from a public list of bounties — with some assignments, called “private bounties,” being available only for experts verified by BugHunt or invited by the client company. Verification depends on an expert’s record on the platform.

  • BugHunt told The Brazilian Report there are 1,500 enrolled security experts, with a growth rate of roughly 250 new “ethical hackers” per month. Around 270 vulnerabilities were identified by the platform recently, says the startup. 

Room to grow. “Brazilian companies did not have a national bug bounty platform and many firms sought foreign platforms to create their bounty programs,” CEO Caio Telles told The Brazilian Report. “But, in the current moment, it is much more interesting to start a program that pays in BRL, rather than in USD or EUR,” he adds. Having Brazilian experts is also an advantage, as they have a better understanding of business rules, current legislation, and other particularities, Mr. Telles explained. 

Rewards. Client companies choose the bounty they are willing to pay, with values ranging according to the size and complexity of its cybersecurity structure. While some companies start at BRL 500 (USD 92), others pay up to BRL 10,000 — that is, up to ten times the minimum wage in Brazil. 


This Brazilian startup keeps cattle healthy

From the understanding that parasites in cattle have grown resistant to chemical control methods and that this form of control leaves behind harmful residues, a group of biologists based in Ribeirão Preto in São Paulo decided to develop a more sustainable method of contention. They created Decoy Smart Solutions, which they claim to be the first biotechnology startup to introduce the concept of biological control to the area of animal health in the world. 

Motivation. Chemical methods, such as pesticides, leave residues which are toxic to animals, the environment and humans. “We were worried with the residues of these products in food, as Brazil is one of the biggest consumers of pesticides in the world,” explains Túlio Nunes, Decoy’s co-founder and COO. “But we were also worried with the health of the workers, those who treat the animals in the farms, as they are the ones in contact with chemical products the entire time,” he adds. 

Products. The startup developed two products: one to be applied on the herd and the other on the pasture, which harbors 95 percent of ticks on a given property. The products use fungal spores, the “natural enemy” of ticks. The method uses pre-existing relations in nature to control the parasites, not requiring the use of chemical agents. 

Regulation. The products have been submitted to the Agriculture Ministry for registration — a process which consists of two phases. Decoy’s products are in the first phase, focused on the registration of the place where the solutions will be produced. Mr. Nunes estimates between nine months and one year for the entire registration process to be concluded. 

Partnerships. While they await the green light from regulators, Decoy has set up partnerships with producers, under which they provide solutions in exchange for information on the treatment and funding assistance for the development of the research. So far, the partnership scheme has reached 400 producers. The goal is to reach 1,000 by the end of the year.

  • “The idea came in a moment where we already had the technology available, but we could not market it. We could not stay inside the lab waiting for the technology to be registered to only then reach out to the final customer. Because of this, we used this partnership program to improve our product further,” explains Mr. Nunes. 

Investments. Decoy kicked off with public funding under a project approved by Fapesp, a research foundation in the state of São Paulo. Subsequently, the startup received the support of an angel investor. It has since raised resources from an investment fund, allowing the startup to build a factory and solidify its structure. 


Take note

  • Streaming. Disney announced that its streaming service will become available to Latin American countries — including Brazil — in November. Launched in November 2019, Disney+ features both classics and original productions, with 50 million-plus subscribers worldwide. The company has not mentioned pricing for Latin America. The region is expected to end 2020 with 62.2 million subscribers to streaming video services, a 36-percent increase on last year’s figures.
  • Delivery. On Thursday, we explained that the National Civil Aviation Agency (Anac) authorized food delivery giant iFood to begin tests on deliveries using drones. Two companies — Speedbird Aero and AL Drones — received licenses to begin trials, which will happen in Campinas, a city of 1 million people, located two hours north of São Paulo.
  • Payments market. This week, payments startup Stone announced it was buying software solutions company Linx for BRL 6 billion. The former currently has nearly 520,000 active clients, while the latter has 70,000 clients and 100,000 card machines. The acquisition is the latest development in a heated and eventful segment, as explained by The Brazilian Report.
  • Televised commerce. Media giant Grupo Globo, owner of TV station Globo, announced a partnership with home goods retailer Casas Bahia and with ad agency Young & Rubicam. The trio will work to enable real-time sales on television, using the channel’s grid. Viewers would be able to use their remote controls to access products and buy items being used as props on shows.[/restricted]
Categories
Tech

Tech Roundup: Brazilian university to send pioneer burn treatment to Beirut hospitals

You’re reading The Brazilian Reports weekly tech roundup, a digest of the most important news on technology and innovation in Brazil. This week’s topics: Brazilian researchers’ endeavor to find out if Covid-19 can be detected in speech, Brazilians reject having their private messages tracked, and researchers in Ceará that use tilapia fish skin for burns reach out a helping hand to Beirut. 

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Scientists in Ceará offer tilapia skin to treat Beirut burn victims

Researchers from the Federal University of Ceará plan to donate[restricted] the entire stock of their pioneer burn treatment using tilapia skin to help victims of this week’s massive Beirut explosion, which has killed at least 154 people and injured another 5,000. The full donation would amount to nearly 40,000 square centimeters of fish skin. 

Transfer. Despite their willingness to make the donation, moving the material is a big challenge, says Edmar Maciel, from the burn institute at the Fortaleza-based Doctor José Frota Institute, and also one of the creators of the project. “It is very difficult because of the custom procedures of each country,” he tells The Brazilian Report. This morning, Dr. Maciel said the project is in contact with the Foreign Affairs Ministry, the Rio de Janeiro Health Secretary, and Secretary of Fisheries Jorge Seif — all parties that are seeking to make the donation possible. 

  • Dr. Maciel says the project is conducting studies in seven countries — Colombia, Argentina, the U.S., Canada, the Netherlands, and Guatemala — but donations are still very challenging. In July, the project tried to donate tilapia skin to help treat burn victims of a fuel truck explosion in Colombia. 

The project. Since 2015, researchers at the UFC have been working with the skin of tilapia fish as a biomaterial in a highly-renowned project to treat burn victims. Besides being used for bandages, the technique has also been employed in wounds, gynecological surgeries, and regenerative medicine.

Out of this world. In May 2019, the university announced that it was providing samples of its biomaterial bandages to be tested in space by Nasa. The experiments aimed to find out how the fish skin behaved in different conditions of atmospheric pressure, radiation, and gravity. 

Why it matters. Initiatives such as this one highlight the importance of the scientific work being done at public universities in Brazil. While lack of funding is nothing new for Brazilian students and researchers, the sector has faced many strains since Jair Bolsonaro became president.


Can Covid-19 be detected by voice? Brazilian scientists want to find out

A team of researchers from the University of São Paulo’s Medical School and the Institute of Mathematics and Statistics (IME-USP) is leading a study to develop “Spira,” a tool that would allow Covid-19 to be detected by voice, using machine learning and artificial intelligence. So far, over 11,000 voices have been collected. 

  • Spira stands for “System for the Early Detection of Respiratory Insufficiency through Audio Analysis.

How it works. Scientists have fed a computer with voices of both Covid-19 patients and healthy people, and then teach the computer to differentiate them. The system will then attempt to find patterns in the two groups. 

  • The project is currently employing two different methods: small data and big data. While the first involves researchers looking at data individually to create a hypothesis based on visual and hearing observations of the recorded voices, the second involves AI and machine-learning techniques.
  • A third method is still under study, as it requires a larger universe of data — it would consist of creating a mathematical model based on speech, Marcelo Finger, one of the researchers, tells The Brazilian Report.

Promising. Mr. Finger expects to present a report on the findings of the two employed methods by year-end, though early results are promising. “We know it is possible to get something, now we need to be sure that what we are obtaining is what we are proposing ourselves to find,” he says

  • While the first indications are encouraging, early findings are being scrutinized by the researchers themselves. “We are in the stage of criticizing our results, we will not dive in headfirst just because we got a good number,” says Mr. Finger. 

The motivation. This is a very strange disease because the person who gets sick doesn’t seem to understand how sick they are, so somehow they think they’re O.K., but suddenly they get very sick,” explains Anna Sara Shafferman, a professor at the University of São Paulo. “What we started to see is that people only go to the hospital at a very advanced stage.”

  • Meanwhile, emergency departments in hospitals are crowded with patients presenting mild symptoms that do not necessarily require immediate assistance. Spira would seek to help both of these patient groups. 
  • “Everybody is very worried, and people panic because of Covid-19, and if you could say: well, I can use this app and keep calm and not go to the hospital because I’m well, or on the contrary, go to the hospital because you’re sicker than you feel, this would be very useful,” says the professor. 

The potential. If the project turns out to be successful, it could help mitigate the strain on public health services, as only people who are in a severe state will be encouraged to seek emergency help and less serious cases will be encouraged to stay at home. Ms. Shafferman also says the tool could be used for other diseases that involve respiratory failure. 

  • It also has the potential to be an inclusive and democratic tool, as it would only require users to download a smartphone app or call a hotline. 

9 in 10 Brazilians don’t want their private messages tracked

A new survey conducted by pollster Datafolha and commissioned by Facebook found that 87 percent of Brazilians are opposed to the idea of their personal messages on social media being monitored. For the first time, the survey also revealed that eight in every 10 Brazilians support punishment for those who fund the spread of misinformation. 

Why it matters. The so-called ‘Fake News’ bill, approved in the Senate at the end of June, proposes that messaging apps monitor users’ messages and retain records of these communications. 

  • The information retained by the companies would include records of forwarded messages, including users’ contact information, the date and time of the forwarded message, and the total number of users who received said messages. 
  • This was just one of many points criticized in the bill by civil society entities. The highly-controversial proposal is currently pending in the lower house. 

Punishment. This was the first time Datafolha had asked its survey sample for opinions on the funding of misinformation. For 80 percent of the respondents, punishment is extremely important. The same survey reveals that Brazilians see a collective responsibility in fighting fake news, shouldered by the press, authorities and governments, citizens, social media companies themselves, schools, NGOs, and private messaging apps. 

  • More than 70 percent also declared they have received “dubious content” or misinformation from friends and relatives. 

What else? Almost 65 percent of the respondents said they are against having to provide personal documents — such as scanning personal IDs — in order to own a social media account. This refers to another point of the ‘Fake News Bill,’ which requires users to show proof of identity in order to join social networks. Internet civil rights entities consulted by The Brazilian Report have said the bill “treats all Brazilians as potential criminals.” 


Take note

  • Data protection. Our Daily Briefing today explained how the pandemic has created confusion around Brazil’s General Data Protection Law (LGPD). Set to come into force this month, its application has been postponed to May 2021 by a government-issued decree. But Congress can still weigh in and make the country follow the original dates.
  • Fake news 1. This week, the International Fact-Checking Network (ICFN) introduced its Fake News Chatbot in Portuguese. The feature connects users to fact-checking experts. “By texting ‘oi’ or ‘olá’ [hello, in Portuguese] to +1 (727) 291-2606, any Portuguese speaking WhatsApp user can easily access quality-verified information about the pandemic,” explains the IFCN. In Brazil, the chatbot is operated in partnership between IFCN and the Rio de Janeiro Technology and Society Institute (ITS Rio). 
  • Fake News 2. WhatsApp Messenger is also moving ahead with measures to fight misinformation. As reported by Tecmundo, the messaging app introduced a feature in some countries this week — Brazil included — by which messages that are considered suspicious by the app will be shown alongside a magnifying glass icon, encouraging users to research the reliability of the content being received. 
  • Broadband. Brazil’s National Telecommunications Agency (Anatel) released a report this week on customers’ complaints to telecoms services in the first half of 2020. On the year-to-year comparison, there was a reduction of two percent in the volume of complaints. When compared to the second semester of 2019, dissatisfaction grew nearly seven percent. Fixed broadband was biggest gripe for Brazilians, with complaints rising 40 percent in the first six months of the year.
  • Political ads. As part of a move to increase transparency in political advertising on its platforms, Facebook announced this week that users in Brazil will now be able to choose if they wish to see political and election ads on their feeds. Additionally, these ads will now come labeled as “paid for by” and “electoral advertising.”
  • Hacked. Vakinha, one of Brazil’s largest crowdfunding platforms, had its users’ information leaked in a global hack this week that targeted 18 services around the world, reports Convergência Digital.[/restricted]
Categories
Tech

PayPal blocks Olavo de Carvalho in latest blow for far-right ideologue

The Virginia based ex-astrologist and self-defined philosopher Olavo de Carvalho is widely regarded as the ideological guru of Brazil’s far-right President Jair Bolsonaro. However, his influence may be waning, as exemplified by a recent move by money transfer app PayPal to block Mr. Carvalho’s account.

PayPal decided to drop the far-right eccentric after a campaign led by Sleeping Giants Brazil, a social media pressure group that aims to persuade companies to remove advertisements from right-wing media outlets publishing misinformation online.[restricted] The campaign also demanded that Brazilian payments app PagSeguro close his account. At the time of writing, the company has yet to respond. In a typical move in response to his ban, Mr. Carvalho accused PayPal of being communists.

PayPal’s decision to close his account is the latest setback for Mr. Carvalho and his allies. Brazil’s Supreme Court has been progressively cracking down on a ‘fake news network’ involving supporters of President Bolsonaro and ‘disciples’ of Mr. Carvalho. Last week, one of the most prominent pro-Bolsonaro online activists Allan dos Santos fled to Mexico, allegedly to avoid prosecution for spreading disinformation. Meanwhile, Mr. Carvalho has spent the last few weeks levelling homophobic abuse at the popular YouTuber and vocal Bolsonaro critic, Felipe Neto.

Who is Olavo de Carvalho?

Aged 73, Olavo de Carvalho has already lived several lives, from his years as a communist, to leading an Islam-inspired cult, to becoming possibly the most influential ‘intellectual’ of Brazil’s new right-wing. Mr. Carvalho is the author of numerous books, including freely translated titles such as The Collective Imbecile and The Minimum that You Need to Know to not be an Idiot. Perhaps the best way of explaining Mr. Cavalho to a foreign audience would be to imagine an Alex Jones-like shock jock figure, with illusions of being an intellect akin to Noam Chomsky, with an unscrupulous penchant for profiteering off wild conspiracy theories and radical teachings.

His philosophy is difficult to pin down, believing that Pepsi cola is flavored with aborted fetuses, that Britain’s Prince Charles is an undercover Islamist agent, and that Albert Einstein invented the theory of relativity to cover up the fact that the world does not revolve around the sun. His latest obsession, unsurprisingly, is denying the severity of Covid-19. According to Mr. Carvalho, there has not been a single proven death from the disease. 

In short, Olavo de Carvalho is an anti-modernist and anti-rationalist, who rejects the enlightenment and the scientific revolution as being positive steps for humanity, and who seeks to restore the values of that most ‘glorious’ period in human history, the Middle Ages. Granted, these sorts of ideas are not new to Brazil, with many of the most extremist figures during Brazil’s military dictatorship sharing a similarly sex-obsessed paranoid anti-modernist and anti-rationalist vision. But it is Mr. Carvalho’s scatological polemical style, ridden with classical and medieval philosophical references, which makes him stand out from other voices on Brazil’s far-right.

Indeed, Mr. Carvalho’s real genius was becoming aware of the potential of social media in disseminating and monetizing his teachings before any of his contemporaties. He was able to capitalize off swarms of mostly white Brazilian middle-class men looking for a worldview to justify their resentment of the left-wing, feminism, and affirmative action in public education. His online courses — which have had as many as 20,000 students — were offered to anyone to pay and Mr. Carvalho raked in the cash, while in his self-imposed exile in Virginia. Indeed, PayPal and other such payment apps are crucial to this scheme, as his means of receiving income.

His relentless attacks on such right-wing bugbears as “Cultural Marxism,” the “gay agenda,” and feminism found a captive audience in Brazil. A large part of his audience consists of Brazilian middle-class types who went to private universities and harbor resentment towards elite public universities, which they view as having excluded them for ideological rather than academic reasons.

For Mr. Cavalho’s followers, the establishment — under the governments of the Brazilian Social Democratic Party and the Workers’ Party — comprised politically correct, center-left types with technocratic leanings. In this milieu, Mr. Carvalho, who lacks formal qualifications in his field and fills his rants with an ample number of anally fixated profanities, suddenly became an anti-establishment figure of sorts for a certain type of Brazilian.

His philosophy also gives intellectual cover to the standard right-wing agenda of dismantling public education, viewed as a breeding ground for orgy-crazed, drug-addled communists and teachings of “globalism.”

The President and his guru

Olavo de Carvalho’s ideas were first introduced to President Bolsonaro by his politician sons Carlos and Eduardo, assiduous fans of his work. In turn, many figures in the cabinet are now dedicated Olavistas, such as Foreign Minister Ernesto Araújo, and it is rumored Mr. Carvalho was able to directly influence government appointments and firings. His influence was considered so great in the cabinet that Congressman Alexandre Frota once joked most of Brazil’s problems would be solved by “firing a missile aimed at Virginia.” 

However, the relationship between Brazil’s president and his guru has soured of late. Mr. Carvalho has accused the president of lacking the courage to ‘complete his mission’ and keeping ‘communist saboteurs’ such as Vice President and Army General Hamilton Mourão in his cabinet. He has frequently attacked Mr. Bolsonaro’s allies in the military for standing in the way of the president’s agenda, though he did suggest the president should use the military to shut down Brazil’s Supreme Court.

The PayPal move is not just a hit to Mr. Carvalho’s credibility, it could be a serious problem for his own revenue. The ideologue could see his sources of income dry up, especially if other companies follow PayPal’s lead. What’s more, Mr. Carvalho owes some BRL 2.8 million in damages to Brazilian musician Caetano Veloso for defamation, among other legal fees. Given that President Bolsonaro’s attention is mostly focused on avoiding impeachment and protecting his family from criminal investigations, the influence of his ideological guru may dwindle further.[/restricted]

Categories
Tech

Argentinian fintech believes in cryptocurrency to beat currency volatility

With an increasingly volatile Peso, Argentinian citizens are beginning to look toward cryptocurrency as a way to protect themselves from exchange rate fluctuations. This, in turn, has led to a wave of fintechs leveraging their businesses with digital assets, as is the case of startup Ripio, which builds financial products using blockchain and proudly describes itself as a “promoter of the new digital economy.” 

The economic tension caused by the Covid-19 crisis has aggravated Argentina‘s already fragile fiscal situation, leading to a further drop in the Peso against the U.S. Dollar. After years of crisis, mounting inflation, and high foreign debt, greenbacks are the only currency Argentinians rely on for important transactions, such as buying or selling property.[restricted]

It is in this dollar-dominant system that cryptocurrency may find a foothold as another solution for Argentinian citizens to protect themselves from the volatility of their national currency. At least, that is the view of Ripio CFO Matías Dajcz, who is on a mission to convince the country that digital assets can be as reliable as U.S. Dollars.

The startup is one of many in Latin America that are banking on cryptocurrency, but it claims to be the fastest-growing. Beyond Argentina, Ripio also operates in Brazil, Mexico, Uruguay, and Spain.

Ripio is the Spanish word for gravel, and the company claims that “like gravel, we open new paths.” The goal is to provide financial inclusion to Argentinians who do not have a bank account — almost half of the country, according to data from World Bank Global Findex in 2017. 

After 22 years in the traditional banking industry, Mr. Dajcz has been working at Ripio for two and a half years. The startup has already made four funding rounds, raising a total of USD 4.6 million.

The startup was born seven years ago as the first bitcoin payment processor in Latin America, under the name Bitpagos. Today, Ripio offers a digital wallet, in addition to exchange and credit services.

The digital wallet allows the user to buy, sell, store, and transfer Bitcoin and other cryptocurrencies. Users can open a free account and make a deposit by bank transfer or payment system MercadoPago in order to buy digital assets. “Our main product is a digital wallet designed for users who want to buy and store crypto but don’t necessarily know how to read the market or trade crypto assets. The main options are simple: deposit and withdraw funds (in local currency) and buy or sell crypto at market price,” explains the CFO.

The exchange platform is made for real-time cryptocurrency trading. It is built for crypto-savvy users, who can place buy and sell orders at their preferred price and also choose between different types of orders.Last month, the World Economic Forum released the 20th edition of its cohort of Technology Pioneers, a selection of 100 early to growth-stage companies from all over the globe that are pioneering new technologies and innovations. On this latest list, four companies in the group are Latin American: CargoX, Descomplica, NotCo, and Ripio.

cryptocurrency argentina peso
Ripio CFO Matías Dajcz. Photo: Ripio

How can cryptocurrency be a way in Argentina’s current economic situation?

The problem of currency devaluation in Argentina has become a breeding ground for cryptocurrencies in the country. Ripio currently has 500,000 users and counting. “We have been experiencing a huge increase in users on our platforms since the beginning of the pandemic,” said Mr. Dajcz. 

During the second quarter of this year, Ripio saw an immediate boost in its operations and volume of transactions tripled. “People are looking for new financial alternatives, mainly in Latin America, and we see how cryptocurrency is slowly approaching mass adoption due to the current situation,” he explains. 

For the CFO, now is the right time to gamble on crypto in the country and in Latin America as a whole.

Argentina has one of the largest crypto communities in the world and is also a hub for blockchain development, says Mr. Dajcz, adding that this is related to the aforementioned historical economic crisis, the significant devaluations of the Peso, and high rates of inflation. “This has resulted in younger people, aged between 18 and 30, moving towards cryptocurrency, instead of traditional investment options.”

According to Mr. Dajcz, most Argentines who entered the cryptocurrency market to protect themselves from deflation used to buy foreign currency every month. Instead of purchasing U.S. Dollars, they began buying crypto assets. “The huge increase in demand for dollar-linked stablecoins is a clear sign of this scenario,” he says. 

As buying foreign currency is currently limited in the country, crypto-savvy users turn to stablecoins such as USDC or Dai as an alternative. In addition to the well-known Bitcoin, Dai and the USD Coin entered Ripio’s portfolio with the proposal to remain pegged to the greenback.

In the case of USD Coin, for each coin issued, there is one USD stored in a bank account that is constantly monitored and audited by different agents, such as financial entities and other companies in the sector.

“These crypto-assets gained a lot of popularity because stablecoin holders don’t need to expose themselves to more volatile assets such as Bitcoin or Ethereum. Most stablecoins peg their price to the U.S. Dollar, as it is the most widely adopted fiat currency worldwide,” he says.

In turn, Dai is backed by other digital assets but also seeks to guarantee parity with the greenback, using other cryptocurrencies — mainly Ethereum or ETH — as a backup, through a decentralized collateral system. That is why it also goes by the name ‘crypto-dollars.’


This article was originally published on LABS – Latin America Business Stories, a news platform covering business, technology, and society in the region for an English-speaking audience.

https://labs.ebanx.com/

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Categories
Tech

Tech Roundup: Will Covid-19 consolidate Brazil’s shift to e-government?

You’re reading The Brazilian Reports weekly tech roundup, a digest of the most important news on technology and innovation in Brazil. This week’s topics: the bidding war for bankrupt telecom firm Oi, Brazil’s turn to e-government during the pandemic, and the country is a hotspot for ‘credential stuffing’ attacks.

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Will Covid-19 consolidate Brazil’s shift to e-government?

Since the start of the pandemic, demand for government[restricted] services online has surged. In June, the federal administration’s online e-government portal Gov.BR recorded over 12 million users, three times that of January, according to data from the Economy Ministry. Does this mean Brazilians are beginning to wave goodbye to in-person bureaucratic services? 

The great accelerator. The Economy Ministry said the Covid-19 pandemic has forced the government to speed up its process to digitize services. As part of the 2020-2022 Digital Government Strategy, the administration intends to offer 100 percent of its 3,000-plus services online.

Right direction. As explained in last week’s Tech Roundup, Latin America — Brazil included — is improving in the United Nations’ e-Government index. The index ranks countries according to their availability and quality of online services, telecoms infrastructure, and human capacity to operate it.

Keep an eye out. According to Alexandre Barbosa, a senior innovation researcher at ITS Rio, the success of this move to digital depends on how citizens will access the services. He mentions the Provisional Decree 983, regarding the use of electronic signatures in government agencies, as a crucial turning point. The decree is likely to go to a vote in Congress in the coming weeks. “It will be decisive to stop or further the digital agenda,” Mr. Barbosa tells The Brazilian Report.

States and cities. Though embedded in the ministry’s agenda, the digital transformation of states and cities has not kept up the pace with the advances seen in the federal sphere. States have been tackling their own agendas, with Mr. Barbosa praising the examples of Alagoas, Minas Gerais, Rio Grande do Sul, Ceará, and Espírito Santo. 

  • But in order to make progress with municipalities’ turn to e-government, the relationship between the Economy Ministry and the Regional Development and Science and Technology Ministries would have to improve, says the researcher. 

Going bankrupt, telecom firm Oi now at center of bidding war 

The troubled and near-bankrupt telecoms provider Oi, the fourth-largest in the Brazilian market, has all of a sudden found itself at the center of a fierce bidding war. Telecom infrastructure group Highline is battling to win the rights to absorb Oi’s mobile operations, competing against a consortium of the country’s three other sector giants, TIM, Vivo and Claro.

Why it matters. The top three companies fear the creation of a “fragmented market, with many different mobile providers operating across Brazil and competing with the big players,” said a local funds manager, who spoke with The Brazilian Report.

Yes, but … Sector experts are skeptical that a takeover by TIM, Vivo, and Claro would be approved by regulators. The deal would turn Brazil’s already concentrated market into an even less competitive landscape.

  • Oi’s near-bankrupt status, however, might offer “the necessary window of opportunity” for such a deal, according to the fund manager.

Belle of the ball. In a securities filing, Oi informed markets that it had begun exclusive talks with Highline, which it says is the highest bidder, without disclosing the amount. Then, the trio of Brazilian giants increased their offer to BRL 16.5 billion for a deal that would also include a long-term services provision contract.  

Highline who? Highline is backed by U.S.-based investment firm Digital Colony, which according to Bloomberg, is seeking to expand its footprint in Latin America. Originally focused on real estate, the company is now seeking to reposition its portfolio in telecoms infrastructure. 

  • Besides buying Highline do Brasil, in 2019, the firm also purchased data center assets from Grupo Folha — which owns Brazil’s largest newspaper Folha de S. Paulo — earlier this year.

Now what? Oi said it is analyzing further steps while respecting exclusive negotiations with Highline, which last until August 3. No further details were provided.


Brazil among top 5 countries with most ‘credential stuffing’ cyberattacks

Brazil is one of the top 5 countries in the world where the most ‘credential stuffing’ cyberattacks against financial services originated in 2019. It leads Latin American nations in that category, according to a report by a content delivery network and security solutions firm Akamai

What is credential stuffing? As explained by Wired, credential stuffing is a mass hacking technique by which attackers obtain a complete database of usernames and passwords —potentially resulting from corporate data breaches — and try to apply these login credentials into other digital services.

  • “Because people often reuse the same username and password across multiple sites, attackers can often use one piece of credential info to unlock multiple accounts,” explained Wired. 

Targets. Akamai found that around 20 percent of the 88 billion such attacks in the world were against media companies, including streaming platforms. Akamai attributed that to the surge in on-demand content in 2019. But press websites saw a 7,000-percent bump in attacks.

Update. A delay in the release of the report due to the pandemic allowed Akamai to include Q1 2020 data. In that period, Brazil climbed to the third position in the ranking, producing over 650 million attacks on the media industry and over 1.1 billion attacks in general.

How to protect yourself. Steve Ragan, who co-wrote the report, says that as long as logins and passwords exist, these attacks will continue. He argues that, besides educating consumers, companies should also implement more robust authentication methods. 


Take note

  • Fake news 1. Pro-Bolsonaro Twitter accounts were once again targeted by the Supreme Court. On Thursday,  Justice Alexandre de Moraes ordered the suspension of 16 accounts on social media worldwide. The decision came after some of the accounts tried to circumvent a previous ruling which only blocked them for users located in Brazil. 
  • Fake news 2. Twitter complied with the ruling and blocked the accounts, but said it would appeal the decision. The company called the measure “disproportionate under Brazil’s current regime of freedom of expression.” On Tuesday, The Brazilian Report showed that Justice Moraes’ decisions set dangerous precedents for the debate on freedom of speech in Brazil.
  • Stocks. Tech companies are performing well on the São Paulo stock exchange,  building on a trend which started before the pandemic. An index created by asset manager Brasil Capital demonstrated that tech companies gained 142 percent in market value in two years — against a general rate of 33 percent. In the first half of 2020, while the local stock exchange sank nearly 18 percent, tech companies alone soared 41.2 percent. “Troubled periods generally speed up technological innovations already underway in society,” reported 6 Minutos
  • Cybersecurity. Hackers in Brasília wiped out over BRL 1.3 million in traffic tickets issued between May 2019 and January 2020. Authorities launched an investigation on Wednesday. 
  • Data breach 1. Cosmetics giant Avon had its data exposed earlier this year, resulting in the leak of over 7 gigabytes found by Safety Detectives, a cybersecurity group. In a June 9 statement, the company — recently bought by Brazilian cosmetics giant Natura — confirmed there was an incident that affected its operations, but without offering confirmation that it was the same incident reported by Safety Detectives.
  • Data breach 2. According to cybersecurity company Cyble Research Unit, a data breach at Brazilian online travel agency Hotel Urbano exposed the private information of over 20 million users (including passwords, addresses, IP numbers, and social media profiles). The data was leaked in March 2019, but the vulnerability was only discovered and confirmed on Monday. The company has yet to comment on the leak.
  • Transportation. São José dos Campos, a city around 90 kilometers from São Paulo, is gambling on a shared public transportation app as a way to modernize its operations, reports Olhar Digital. Under the system, set to start in January 2021, commuters will use an app to hail a minibus, which will be shared with other commuters with similar routes. The idea is to recover the competitiveness of public transportation, which has lost out to ride-sharing services in the last few years. Additionally, the city wants to unify payments for public transportation in a digital account, which allows users to spend their credits as they wish.[/restricted]