Squeezing the competition

Is the march of big tech across LatAm undermining competition?

Few of Latin America’s tech conglomerates expect to position themselves as future rivals to Meta, Google and Twitter et el. But they do expect fair competition, not least as key suppliers of third-party software on major tech platforms – an area where the region’s tech startups can and should shine.  

A senior associate at a legal boutique specialised in competition in São Paulo explained, “Latin American countries clearly lag behind the US and Europe in terms of competition law. When it comes to the regulation of big tech it’s even more obvious. Brazil does not have a specific regulation to control their broader activities so, it is up for CADE [the Brazilian competition authority] to determine whether any of their activities involve market abuse practices.” 

“Latin American countries clearly lag behind the US and Europe in terms of competition law. When it comes to the regulation of big tech it’s even more obvious.”

A senior associate at a legal boutique, Brazil

At present, the Congress is debating a proposal of law known as the “Fake news bill” [In Portuguese: PL das fake news which would limit the spread of false information on social media, an issue which has worried legislators since the election of [President Jair] Bolsonaro. The proposal is quite comprehensive to avoid the spread of fake news. It puts forward certain regulatory tools to limit the spread of fake news and force big tech companies to be more transparent with their use of data. But there is no political consensus on the text. Furthermore, this would only solve one of the multiple issues that the activities of big tech companies generate. In Brazil, there is no holistic approach to regulate their activities. 

One of Mexico’s leading IT specialists explained, “One of the great challenges for Mexico in terms of IT is that we are consumers from abroad, we tend to adopt foreign products and we invest little in our own knowledge. Fortunately, that trend is reversing, but rather than seeing companies that want to go and compete with the big tech companies, what we have more is an app-itis, what we have is the intensive development of apps of all kinds, as well as sales platforms and all that which allows traceability systems and blockchain.”

“One of the great challenges for Mexico in terms of IT is that we are consumers from abroad, we tend to adopt foreign products and we invest little in our own knowledge. Fortunately, that trend is reversing…”

One of Mexico’s leading IT specialists

Across Latin America, an area which has seen significant growth of local tech outfits and investment is in data systems but even here investment in data architecture is a trickle compared to Asia and North America. Social media platforms are simply not large enough, developed enough or attractive enough to lure users away from Twitter and Facebook, there is no Mexican equivalent of Google for example.  

That said, big IT companies have made progress in the country in supporting the banking system to develop better payment alternatives, but current regulation forces banking to remain dominant and the tech companies are partners in generating media for them.  

As for competition with smaller companies since 2020, more or less 15 tech companies have completed IPOs on B3, the Brazilian stock exchange. Their nature is so varied that you cannot immediately tell whether they will be acquired by big tech companies. Our sources see banks and funds investing in them and managing to prevent them from being acquired by Google or Meta.  

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