Brazil: The Epicenter of the Next Tech Megacycle
Unquestionably, Brazil is emerging as the focal point of the next tech megacycle. Since 2012, this rapidly evolving region has matured, witnessing remarkable legislative reforms, technological innovations, and a substantial influx of global investment.
The mantra "follow the money" echoes throughout the tech landscape, as significant shifts—from computing to mobile technology—have evolved alongside advanced payment systems that empower both consumers and businesses. As we transition from software-centric models to data-driven ecosystems, it becomes clear that data is the vital resource fueling artificial intelligence (AI) development.
The intersection of Big Tech, finance, and government has ushered in a dynamic new data economy. While AI is often heralded as the "next big thing," it is the underlying data—the "oil" that drives AI—that is crucial. The inception of this megacycle can be traced back to the European Union's General Data Protection Regulation (GDPR), which championed data privacy in 2016. Brazil has followed suit, establishing comparable data privacy rights and investing significantly in infrastructure and regulation to empower citizens to leverage their personal data.
The surge in AI funding is largely attributed to tech behemoths like Amazon, Google, and Microsoft. However, much of this capital circulates back to these investors through fees charged for access to their cloud platforms.
A pivotal shift looms for Big Tech and other sectors, including biotech, healthcare, finance, and governmental agencies. The near-universal availability of personal data may very well diminish by the late 2020s, necessitating monetization, oversight, and curation of this invaluable information.
Innovative data-sharing models that empower everyday citizens to maintain ownership and control over their critical data could spark a new wave of startup innovation. This new paradigm could enable individuals to benefit from the data they voluntarily contribute, fundamentally transforming the data economy.
In summary, the unrestricted use of personal data is drawing to a close, signaling the dawn of the next tech megacycle.
Data Privacy Evolving into Ownership Rights in 2024
The forthcoming tech megacycle—where individuals globally will own and control the personal data that powers AI—began in early 2019, just before the COVID pandemic. A pivotal moment occurred when Apple CEO Tim Cook penned an influential essay for Time magazine, advocating for robust reforms to protect and empower consumers against unchecked data collection. Apple has set ambitious sustainability goals as it aims for clearer social responsibility by 2030.
Cook stated, “In 2019, it’s time to stand up for the right to privacy — yours, mine, all of ours. Consumers shouldn’t have to endure another year of companies irresponsibly collecting vast user profiles, facing rampant data breaches, and losing control of their digital lives.”
Since then, a wave of data privacy regulations has emerged, diminishing the ability to track consumer behaviors. Visionary leaders like California Governor Gavin Newsom have proposed concepts such as the "new data dividend," which would create a framework for individuals to receive value or compensation for their data when trading with different organizations.
On November 1, 2023, Brazil took a notable step forward by introducing the world's first "General Data Empowerment Act" to Congress, potentially amending the country's stringent LGPD (General Data Protection Law). If enacted, this legislation could establish data ownership rights, providing citizens with a means to monetize their personal information.
Pioneering fintech developments led by Brazil's central bank, Banco Central do Brasil, are setting the stage for a transformative shift toward individual data control rather than corporate dominance. This ensures that data becomes a new, trusted currency, more divisible and resistant to fraud. The introduction of regulations around intellectual property and AI usage emphasizes the urgency of establishing guidelines for the modern landscape.
A recent report from S&P Global Market Intelligence connects these developments to a phased innovation roadmap. This journey commenced with Pix, Brazil's groundbreaking instant payment system, and continues towards the introduction of a central bank digital currency (CBDC) designed to facilitate data monetization.
A Brewing Conflict: Big Finance vs. Big Tech
In recent years, friction has escalated between traditional banks and tech-driven disruptors. Fintech innovations, from cryptocurrency exchanges to new payment platforms and challenger banks, are rapidly transforming financial services.
The summer of 2022 marked a watershed moment for crypto, as a massive influx of investment and capital into web3 technologies rapidly evaporated. NYU professor Scott Galloway proclaimed the end of this market in a post titled "Trustless," following the collapse of Luna and the distressing suspension of withdrawals by Celsius, a lending platform boasting unsustainable interest rates.
Nubank, backed by Warren Buffet, has emerged as the largest bank in Latin America, serving over 90 million customers with a lucrative business model that has positioned it as a leader in Brazil's digital banking sector. Within two years of its launch, Pix has attracted more than 70% of the population, making it the world's fastest-growing payment network.
As central banks heavily invest in CBDCs for cross-border transactions and smart contracts, traditional banks must prioritize innovation to avoid obsolescence in a world where banking is becoming embedded within broader digital experiences.
Emerging Markets Taking the Lead
If the U.S. and other mature markets, like Europe, do not hasten their innovation and legislative reforms, they risk lagging behind in the burgeoning data economy. The challenges posed by AI bias, discrimination, and unchecked data collection threaten democratic values, highlighted in the Biden administration's "Blueprint for an AI Bill of Rights."
As this narrative unfolds in Silicon Valley, Brazilian economist Gustavo Franco likened the struggle for data ownership rights to the challenges surrounding money in the 1980s, advocating for a supervisory structure akin to the Basel Accords for banking systems.
In the same forums, Campos Neto discussed groundbreaking innovations that will integrate Pix, open finance, currency internationalization, and Drex (Brazil’s emerging CBDC), all enhanced by AI to deliver safe and efficient financial product consumption.
Now is the time for the U.S. and other mature markets to step up and engage with this burgeoning data ownership movement. Without explicit consent, data brokers and Big Tech firms would be restrained from aggregating and monetizing individual data.
Ultimately, the next tech megacycle—where AI harnesses personal data collectively controlled by individuals—promises to create a richer economy, benefitting all participants and fostering an environment of trust and engagement within our institutions.
Ranking
