Brazil’s digital markets do not need a regulatory savior so much as a careful doctor. Bill 4,675/2025 arrives with the bedside manner of a reform, but the instruments of major surgery: a new bureaucracy, decade-long designations, and open-ended obligations for firms deemed systemically important. Before Congress scrubs in, it should ask whether the patient is actually failing—or whether Brazil’s existing antitrust tools are already doing much of the work.
Late last year, the Brazilian government submitted the bill to the Chamber of Deputies as part of its “Digital Brazil Agenda.” The proposal borrows from Europe’s Digital Markets Act (DMA), but it is not a straight copy. Its structure more closely resembles the United Kingdom’s Digital Markets, Competition and Consumers Act (DMCC).
Unlike the DMA, the bill would not impose a fixed list of obligations as soon as a company is designated. Instead, it creates a second-stage process in which the Administrative Council for Economic Defense (CADE) would study the designated firm’s markets and then decide which firm-specific duties to impose.
That may sound more restrained. It is still a major shift in Brazilian competition policy.
The bill would amend the Brazilian Competition Law (BCL) to create a new Digital Markets Superintendency (SMD) within CADE. It would empower CADE to designate firms as having “systemic relevance in digital markets” for up to 10 years. It would then allow the agency to impose tailor-made “special obligations” drawn from an open-ended statutory menu.
I have previously written here at Truth on the Market about several problems with this proposal. The bill risks quietly pushing aside the consumer-welfare standard and replacing it with vague goals like “the protection of the competitive process” and “the promotion of freedom of choice.”
Lazar Radic and I have also examined the institutional risks of creating the new SMD. That office would duplicate much of the work of CADE’s existing General Superintendence (SG), rather than building digital-market expertise inside CADE’s current investigative body.
The scale of this proposed overhaul deserved a more comprehensive look. To that end, Geoffrey Manne, Dirk Auer, and I recently published an International Center for Law & Economics (ICLE) white paper, “Digital Overreach: A Premature Turn to Ex Ante Regulation in Brazil.” Policymakers, legal practitioners, and academics should consult the full paper for a detailed economic and institutional assessment of the proposed regime.
This post highlights several of the paper’s central claims. Bill 4,675/2025 raises serious institutional concerns, and it may be unnecessary, given Brazil’s existing antitrust toolkit.
Europe’s early experience also offers a warning. Importing a DMA-style model could bring meaningful tradeoffs, including higher compliance and operational costs, more user friction, and further strain on Brazil’s already notorious “Custo Brasil”—the regulatory and structural cost of doing business in the country.
With that in mind, here are several points the Brazilian Congress should consider before enacting an ex ante regime like Bill 4,675/2025.
Ex Post, Not Exaggerated: Brazil’s Antitrust Tools Already Deliver
The premise behind Bill 4,675/2025—like other ex ante regimes—is familiar: traditional, ex post antitrust enforcement moves too slowly and cannot keep up with digital markets.
Brazil’s recent experience does not clearly support that claim.
In December 2025, CADE reached two landmark settlements—Termos de Compromisso de Cessação (TCCs)—with Apple and Google. TCCs are settlement agreements in which companies commit to stop or change conduct under CADE supervision.
In the Apple settlement, CADE required the company to permit third-party app stores, enable alternative payment processors, and remove anti-steering restrictions on iOS. For a deeper dive, see my Truth on the Market post with Mario Zúñiga, “Apple in Brazil: Ex Post Antitrust Meets Ex Ante Ambitions.”
CADE’s settlement with Google followed a similar path. It prohibited Google from conditioning Play Store licensing on the preinstallation or preferential placement of proprietary apps like Google Search and Chrome.
These outcomes mirror the kinds of structural remedies Bill 4,675/2025 would impose. The key difference is how CADE got there. Traditional antitrust enforcement allowed the agency to tailor remedies to the facts, security concerns, and competitive dynamics of each case, while keeping consumer welfare as the guiding principle for unilateral-conduct enforcement.
That flexibility matters. In the Apple case, privacy and security concerns led CADE to drop a sideloading requirement that had appeared in an earlier interim measure. A rigid ex ante regime would have a harder time making that kind of security-sensitive adjustment.
CADE has continued to move aggressively. In January 2026, it opened an administrative inquiry—alongside an interim measure—against Meta over new WhatsApp terms and the integration of AI chatbot tools.
The Administrative Tribunal upheld the interim measure in March 2026, citing irreparable harm and a likelihood of success on the merits. CADE has since sanctioned Meta for breaching that order. ICLE will publish a more detailed analysis of this case in the coming weeks.
CADE has plainly stepped up digital-market enforcement in recent months. But the number of settled or fully adjudicated cases remains limited. That makes it hard to justify a sweeping legislative overhaul aimed at market failures that have not yet proven beyond the reach of ex post enforcement.
Put differently, the bill tries to solve problems Brazil’s existing framework may already be able to handle. CADE’s recent actions suggest as much. If speed is the concern, the better response is to give CADE more resources and streamline its procedures—not to build a parallel regulatory bureaucracy.
Europe’s DMA: More Clicks, Less Competition
Supporters of the Brazilian bill often point to the DMA as a model. As noted, however, the bill’s architecture more closely tracks the UK’s DMCC because it uses a two-step process.
Even so, Europe’s early experience with ex ante regulation gives Brazil good reason to pause. Early evidence suggests that some DMA obligations create user friction and compliance burdens, while doing little to make markets more contestable.
The consumer-welfare evidence makes the point concrete. Louis-Daniel Pape and Michelangelo Rossi studied the DMA’s restrictions on self-preferencing in the context of Google Maps. By forcing Google to remove the Maps tab from EU search pages, the DMA increased mapping-related queries by 21%. Rival mapping services, however, saw virtually no traffic gains. Users simply had to take more steps to reach the same destination. More clicks, same map, no competitive upside.
Other evidence points in the same direction. Chiara Farronato, Andrey Fradkin, and Alexander MacKay examined the effects of restrictions on Amazon’s private-label products, a common target of self-preferencing rules. They found that such a ban reduced consumer surplus by 5.5%, largely because consumers lost product variety and cost advantages.
Consumers appear to feel these changes. A European Center for International Political Economy (ECIPE) survey found that 39% of EU users reported more cumbersome online experiences after the DMA took effect. At the same time, 80% had no idea the law existed.
The effects extend beyond user experience. Ex ante rules can operate as an “innovation tax,” raising the cost and uncertainty of launching new products. Apple has delayed the European rollout of features such as AirPods live translation, iPhone mirroring, and Apple Maps enhancements, citing DMA compliance uncertainty. Meta postponed the launch of Threads in the EU, and Google delayed certain AI features.
Mario Draghi, former president of the European Central Bank, underscored the broader stakes in his widely cited 2024 report. He linked Europe’s persistent productivity gap with the United States in large part to the tech sector, and identified “inconsistent and restrictive regulations” as a major barrier to scaling innovative firms.
Brazil wants to attract technology investment and raise labor productivity. That makes the lesson straightforward: policymakers should think carefully before importing rules that may dampen innovation and growth.
More Rules, Same Bottlenecks
If the DMA has proved difficult to implement in a well-resourced, highly institutionalized setting like the European Union, transplanting a similar model to Brazil would likely create even greater risks.
Brazil ranks 78th out of 143 countries on the 2025 World Justice Project Rule of Law Index, and 124th on the World Bank’s 2020 Doing Business ranking. In that environment, broad, discretionary regulatory regimes invite strategic behavior and rent-seeking. In simpler terms: rivals may try to use the regulator to hobble competitors, rather than to help consumers.
Brazil also contends with the well-known “Custo Brasil”—the thicket of structural and regulatory inefficiencies that raises the cost of doing business. Those inefficiencies cost an estimated R$1.7 trillion annually, or roughly 19.5% of GDP in 2022. Adding a complex, compliance-heavy ex ante digital regime would likely make those burdens worse, not better.
Capacity constraints raise a related concern. Even in Europe, the European Commission has struggled to staff its DMA enforcement unit, filling only 19 of 80 planned positions. The shortfall shows how hard it is to recruit the technical expertise these regimes require.
CADE faces an even steeper challenge. It would have to absorb major new responsibilities through internal reallocations, with no additional funding. That leaves Brazil with an uncomfortable tradeoff: either the new regime remains under-resourced, or CADE diverts resources from its core antitrust mission.
Beyond the False Choice: Fix the Framework, Don’t Import It
The push for Bill 4,675/2025 rests on what amounts to an “imaginary antitrust consensus.” It also frames the choice too narrowly, as if Brazil must either import a DMA-style regime or leave digital markets untouched.
That is a false binary.
Before making a structural shift of this magnitude, policymakers should consider narrower, more coherent options. Our white paper lays out a sequence of steps Congress could take short of adopting a sweeping ex ante regime.
The first—and best—option is to rely on Brazil’s existing ex post framework. Recent cases show that CADE can address alleged digital-market concerns through tailored, case-specific remedies, including negotiated outcomes like the Apple and Google TCCs.
If lawmakers still decide more intervention is necessary, they should favor targeted measures over economy-wide rules. Japan’s Mobile Software Competition Act offers one useful example. It focuses on smartphone software ecosystems, accounts for cybersecurity, and avoids broad mandates that risk degrading the user experience or undermining the benefits of integrated systems.
If Congress proceeds with Bill 4,675/2025, it should at least add meaningful guardrails to reduce error costs and improve institutional coherence.
Start with the standard. The bill should restore consumer welfare as the lodestar, tying both its objectives and enforcement to demonstrable consumer harm. Without that anchor, enforcement could drift toward protecting less-efficient rivals or chasing vague notions of “the competitive process.”
The bill also needs an explicit efficiencies defense. As drafted, its omission sits uneasily with Article 36 of the Brazilian Competition Law. Designated firms should be able to show that challenged conduct—such as self-preferencing or vertical integration—creates net benefits for users, including quality improvements, lower prices, better security, or reduced search costs. Remedies should reflect those benefits.
The bill also needs tighter designation criteria. Designation should rest on established antitrust principles, including evidence of durable market power and a plausible theory of competitive harm—not proxies like turnover, scale, or cross-market presence.
Institutional design matters, too. Congress should house any digital-markets function within CADE’s General Superintendence, likely as a specialized unit. It should not create a parallel bureaucracy that risks duplication, fragmentation, and internal conflict.
Finally, legislation of this scope should not move forward without a rigorous regulatory impact assessment (RIA). An RIA is a structured analysis of a proposal’s likely benefits, costs, enforcement demands, and market effects. The Brazilian Economic Freedom Act already embraces this logic in Article 5 for major regulatory measures. Congress should hold itself to the same standard here.
The European Commission conducted an impact assessment before adopting the DMA. Brazil has offered no comparable, publicly grounded analysis for Bill 4,675/2025—covering expected benefits, compliance costs, enforcement capacity, and likely effects on consumers, business users, and innovation.
Mind the ‘Brussels Defect’
Brazil need not choose between complacency and comprehensive ex ante regulation. It already has a sophisticated competition authority. It already has legal tools capable of addressing digital conduct. And it has ample reason for caution before adding more discretionary oversight to an economy that suffers from too much regulatory friction, not too little.
Before creating a new digital-markets regime, Brazil should first show that the existing one is failing. So far, the evidence points the other way.
A better path remains available. Brazil can reinforce existing competition-law tools, exercise regulatory humility, and resist the urge to import “Brussels Effect” rules that increasingly resemble a “Brussels Defect.” That approach would better serve Brazil’s 212 million citizens.
No overhaul required—just a skilled and steady hand.
