X Could Be Banned in Brazil This Week

It looks like X is headed for a ban in Brazil, with Brazilian Minister for the Supreme Court Alexandre de Moraes issuing a new warning to the company over its failure to comply with its recent orders.

Back in April, the Brazilian Supreme Court ordered X to comply with government orders to suppress certain accounts which Brazilian leadership determined to have been spreading false reports and hate speech. X refused to action the request, saying that it was not legal, and not within its new “free speech” aligned moderation approach. Then last week, under threat of arrest for local staff due to its failure to comply, X also shut down its Brazilian office and evacuated its employees.

Brazilian authorities have since demanded that X nominate a legal representative in the region, and on failing to do so, the entire platform could be suspended from operating in Brazil from this week.

Which would be a big blow for the struggling app.

X has over 21 million users in the region, making Brazil its sixth highest usage market. If X is shut down, that would cut off a significant amount of X usage and ad opportunity, at a time where X needs more growth, in all aspects.

The most significant concern for X is revenue, with the platform’s ad intake still down around 70% on what it had been before Elon Musk took over the platform in late 2022. Musk had hoped to supplement the platform’s ad revenue with subscriptions, as well as increased data charges, targeted specifically at AI developers. But thus far, neither element has increased to the levels that it significantly lessens the company’s reliance on ad spend.

At the same time, X is also losing users, with its most recent EU reporting showing a 5 million user decline in the European market.  

So it can ill-afford to be cut off in such a significant region, but at the same time, Musk has opted to make a stand against Brazilian leadership, and Moraes specifically, whom he’s labeled “a tyrant” and “an utter disgrace to justice.”

So is Elon right, and should X be taking stand against potentially unjust censorship orders from a foreign government?

The specific details in this case are limited, with even X saying that it hasn’t been provided with adequate information by Brazilian authorities to action its requests.

Yet at the same time, X has also sought to use its influence to spark broader opposition to Moraes and the Brazilian Government, noting in its statement that:

“[Moraes’] actions are incompatible with democratic government. The people of Brazil have a choice to make - democracy, or Alexandre de Moraes.”

That’s probably not going to ingratiate X with local leadership, but at the same time, if X is confident that it’s in the right, and that this is a violation of its foundational pursuit of enabling, free speech, then maybe X should be taking a stand.

The impacts, however will be the same regardless.

In May last year, in an interview with CNBC, when questioned over his divisive approach to posting and moderating content in the app, Musk remarked that:

“I’ll say what I want, and if the consequence of that is losing money, so be it."

It does seem like that will indeed be the consequence, so moral questions aside, the broader challenge Musk now faces is whether the company can afford to take such stances, and remain in business.

Whether X agrees with the order or not, whether you or I think it’s the right stance to take, at the end of the day, the people making these decisions are the local governments in power, who have the capacity to restrict X for non-compliance.

X can, and is taking a stand. But it will also have to weather the impacts.