X MAKES ITS EXIT
Elon Musk and his American fans discover that "Brazil First" is the alpha and the omega of doing business there.
The escalating conflict between Elon Musk’s social media network X and the Brazilian judiciary reached the breaking point early Saturday morning when an order blocking the service in Brazil by Supreme Court Justice Alexandre de Moraes went into effect. The high court judge also ordered Apple and Google to remove X from their app stores in Brazil and threatened anyone who used a virtual private network (VPN) to access the banned platform with daily fines equivalent to about nine thousand U.S. dollars. Musk responded by offering Brazilians an end-run around the ban via his Starlink satellite internet service, and said the company would not obey the “illegal” order from the “unelected pseudo-judge”. On Monday, the Supreme Court unanimously upheld the legality and constitutionality of the order blocking X. Justice de Moraes ordered the freezing of Starlink’s assets in the country to pay for fines incurred by X, finding that it was part of the same “economic group” as the social media platform. Starlink quickly reversed itself and said it would comply with the court’s orders while it filed its own appeals challenging them. Musk also opened an account on X called “Alexandre Files” where he posted sealed orders by Justice de Moraes related to the case.
What is underneath?
As I wrote back in April, Musk appears to have been driven by impulse in this conflict with the Brazilian judiciary rather than by strategic thinking. Apparently, Musk has personally carried out the entire corporate response and relied on misinformation, a poor understanding of Brazilian legal and political culture, and contradictions with his own previous statements about complying with local laws in countries where he operates. It has hurt his cause to push back on the Brazilian courts around free speech limits, which could have been successful had there been a strategy for success.
Instead, X has lost about 22 million users with the blocking of the platform in Brazil. That figure was down by nearly half of its peak in the country when the network was called Twitter and Musk was not in charge. Conservative Brazilian politicians and influencers took advantage of the country’s rapt attention and posted defiant final messages about free speech and democracy.
But the reaction from the vast majority of Brazilians on X as the app was shutting down was the usual explosion of gallows humor and clever memes, as well as notes to their friends on where to find them on other services. What Musk didn’t seem to understand is that Brazilians have long been accustomed to coping with the ephemeral (for them) consequences of powerful egomaniacs fighting with each other. They are not taking to the streets.
The conflict began when Justice de Moraes ordered X to temporarily block a handful of active profiles that were under investigation for spreading disinformation that illegally incited violence and subversion of the democratic system. Musk refused, and the disagreement only escalated from there.
In fact, there is no absolute guarantee of free speech in Brazil’s constitution, nor has there ever been since it was enacted in 1988. For example, racial insults against an individual are a crime under a statute adopted by the Brazilian Congress in 1989, and it is regularly enforced by criminal prosecutions. It is also illegal to incite criminal activity or to publicly praise it, as well as insulting a public official on the job for reasons of their duties.
Furthermore, the Brazilian legal and regulatory system has long been structured to favor national interests and “the public good” over corporate rights, especially those of foreign companies. Built in tandem with those principles is a raft of protectionist laws and regulations designed to elevate and favor national companies over foreign ones. In short, “Brazil First” remains the alpha and the omega of the country’s legal system, its business culture and its politics.
Opinion polling as this week went on showed that Alexandre de Moraes shares the highest approval rating among his Supreme Court colleagues, and a plurality of Brazilians side with the judge over Musk in the conflict. The numbers also show a huge majority opposed to the judge’s threat of daily individual fines for VPN use to get around the ban on X, as Brazilians are already regular VPN users to end-run all sorts of paywalls and rights protections on foreign streaming services. The debate over fake news and free speech is less heated than threats to practical day-to-day things Brazilians rely on. X was not among them.
As of this morning, X is still blocked in Brazil. The rival startup service Bluesky reported over 2 million new users joined in the last week. Services that 80 to 90% of Brazilians use regularly like Meta’s WhatsApp and Google’s search engine, both of which have tangled with Brazilian judicial and regulatory interventions in the past, remain online and undisturbed.
Our take:
Once popular social media platforms like X have gone away in Brazil before and Brazilian users simply shrugged and moved on to the next thing. In the case of X, the nature of the user base might have misled Musk to think his tactics would lead to some kind of political uprising in the country. It hasn’t.
Some 90% of Brazilians were not on X when it went off the air and most probably never had been, but most Brazilian journalists and political figures certainly were. The shutdown disrupted that digital conversation space without question. But the Brazilian public has been increasingly disaffected by both the media and the political class for some time and are not moved by their endless cries of indignation anymore. Perhaps Musk was making his tactical decisions based on the mirage he was seeing on his own platform rather than from Brazil’s complex reality.
Several high-profile observers of the conflict have been quoted this week as saying the blocking of X would bring such harm to Brazil’s reputation that investors would flee. At the same time, the biggest inflow of foreign direct investment to Brazil this year was hitting a peak of over R$10 billion in a single month, driven by anticipated rate cuts by the U.S. Federal Reserve. Analysts noted that it would have been larger and more sustained had concerns over Brazil’s fiscal health been assuaged. Brazil’s legal and regulatory system which Musk has been attacking is well known to anyone who has read a Brazilian prospectus in the last 30 years. Such known risks haven’t deterred them before.
Critics of Musk have been taunting him over X over his public embrace of complying with China’s ban on the service and India’s demands to remove content that offends its ruling party. These exposed flanks have dampened what was Musk’s real opportunity to elevate the free speech debate that has been happening for years around the Supreme Court’s aggressive enforcement of prohibitions on hate speech and disinformation. It has, instead, become a bit of a sideshow due to the absence of narrative control and strategic cohesion.
His posting of the judge’s sealed orders were a good example of how Musk has allowed impulse to overtake strategic thinking. The documents revealed nothing important or unknown about the court’s actions and it came across as a petulant and rowdy act. This fueled the narrative that Musk is a billionaire who thinks the law doesn’t apply to him, and President Lula da Silva said as much this week. Brazilian telenovelas for decades have had villains like that who always get their comeuppance in the final episode to sky-high television ratings and the delight of the viewing public. Even the villains that gain fandom are not spared, and that’s all part of the fun in Brazilian culture.
Justice de Moraes is not out of the woods with the Brazilian public, however. He and the Supreme Court are pushing their institutional integrity up and over the line of public tolerance. It just that the line is not drawn over conceptual notions which Brazilians mostly see as malleable, like free speech. Shutting down access to VPNs, text messaging or search engines would really infuriate the public. And the Supreme Court’s nullification of all the corruption convictions in the Lava Jato scandal allowed the stink of incredulity hanging over the political establishment to waft over and onto the judiciary.
Twitter gave birth to Brazil’s thriving meme culture over social media. Indeed, Musk and his X platform will find an enduring legacy in the art of Brazilian memes for years to come. They’ll just be found on WhatsApp, Instagram, TikTok and whatever else comes along.