Tech giants face US Congress hearings on competition

Just came across this article on the US Congress hearings of the giant Tech companies Google, Facebook, Amazon and Apple. What called my attention was the approach from the executives (you know, corporate diplomats) in stating that they face competition and are not monopolies – which, let’s be honest, is not quite accurate.

I believe that the issue with governmental affairs professionals in private organizations is the short-sighted vision on matters of public interest. This is the core scope of their work and yet, governmental affairs specialists bring this fierce attitute of business strategy to the public debate – definitely not a win-win approach. This approach will only continue to get the exact conter-productive reaction they got from congressman David Cicilline, as reported by Wired:

“I don’t think there’s any question that we cannot expect them to regulate themselves. We’ve seen the total absence of any ability to regulate themselves, so I think it will absolutely require some action by congress.”

Would it be reasonable to say that the new data economy revolves around data as the raw material of its production systems? Does this mean that these tech companies are extracting data as a commodity?

They are arguing that they extract these commudities to serve their consumers. But, aren’t their consumers the people who they also extract the raw material from?

And what do the consumers/suppliers get in exchange? Not much except an overwhelming load of personalized advertising (is this a benefit, anyway?) and access to content creation and sharing platforms – which is the over-the-top (OTT) infrastructure of the production system.

Well, I believe that it basically comes down to the fact that the emerging production mode (knowledge production systems) does not close the economic feedback loop. In the industrial mode of production, in which raw material is in fact extracted from space territory, there is a feedback loop – concessions pay taxes and royalties to the States that have sovereignty over territory and wages to workers who provide labor to extract the material. However, in the emerging information age, the story is completely different. And my argument is that people – the data subjects from which raw material is extracted, hence data providers – are shut outside of the economic loop. This has something to do with the flawed assumption that all individuals performing economic agency (i.e. as both end consumers and data providers) are conscious homo economicus.

But anyway, this is a long academic argument which I will try to elaborate on further in my next article. Until then, I offer a couple of links to the respective US Congress hearings that made headlines this week.

Recently created government fund for secured infrastructure projects in Brazil

The other day a foreign investor who was looking into potential infrastructure projects in Brazil asked me whether the Brazilian Government makes use of Sovereign Guarantees, Bank Guarantees and/or SBLC’s to attract and secure foreign investors (ment).

At least for infrastructure, I believe the most suitable instrument would be the Brazilian Law 12.712/2012, Art. 32, which establishes the Infrastructure Guarantee Fund (or FGIE, Fundo Garantidor de Infraetsrutura).

This fund is managed by the Brazilian Guarantee Agency (or ABGF, Agência Brasileira Gestora de Fundos Garantidores e Garantias S.A.) and is operated through guidelines which regulate the direct guarantee awards (Regulamento de Operações para Outorga de Garantia Direta Pelo Fundo Garantidor de Infraestrutura), meant to offer risk coverage for noncompliance of pecuniary obligations assumed by the public partner in Public-Private Partnerships.

As of its latest report made publicly available (December 31st, 2017), this fund comprised the value of R$ 568.560.446,00 in total net assets (approx. USD 156.043.574,93 today; not very large due to its recent establishment), and applicable to specific concession operations including the following:

I – Major infrastructure projects included in the Growth Acceleration Program (or PAC, Programa de Aceleração do Crescimento) or strategic programs defined by the Executive Branch;

II – Projects resulting from Public-Private Partnerships in the form of Law 11.079/2004.

However, the exact answer to this question depends heavily on the sort of infrastructure project, value and nature of partnership sought in the country, amongst other specifics.

Brazilian Central Bank publishes Fintech regulations

On April 24th, 2018, the Brazilian National Monetary Council (CMN) approved Resolutions 4.656 and 4.657, which regulate the performance of financial technology companies (known as Fintechs) operating in the credit market.

According to Resolution 4.656/2018, Fintechs may operate within the following two frameworks:

  • Direct Credit Society, or SCD (Sociedade de Crédito Direto), through which Fintechs can lend money raised through investment funds, eliminating the bank as an intermediary; or
  • Person-to-Person Credit Society, or SEP (Sociedade de Empréstimo entre Pessoas), which allows for peer-to-peer lending operations within the established limit of R$15.000 per CPF (individual) or CNPJ (organizations).

In September of 2017, the Brazilian Central Bank had opened a request for comments on the subject (BC Public Consultation 55/2017). The new regulation is part of its + Agenda – the Bank’s strategy to increase competition in the National Financial System, foster credit offer, reducing the cost for the final borrower and increase legal certainty to operations.

 

REFERENCES:

Folha de São Paulo. Fintechs poderão concede crédito sem mediação de banco. May, 2018.

InternetLab. Banco Central regulamenta atuação de startups de tecnologia no mercado de crédito. April, 2018.

Banco Central. BC coloca em consulta pública atuação de Fintechs no mercado de crédito. September, 2017.