Brazil Hits Enter on Digital Piracy Crackdown

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Brazilian authorities have launched a nationwide operation against digital piracy in conjunction with US and UK law enforcement but doubts remain about how connected the practice is to more traditional aspects of organized crime.

Since early November, Brazil’s Ministry of Justice and Public Security has launched the second phase of Operation 404, carrying out 25 search-and-seizure warrants across 10 federal states that led to the blocking of 65 illegal content streaming applications and 252 Brazilian websites, as well as 27 British and 3 American websites, according to a government press release.

The government has insisted this operation was targeting organized crime. Brazil’s Minister of Justice and Public Security, André Mendonça, stated on Twitter that the lucrative profits demonstrated digital piracy was “not just a crime of copyright, but also money laundering and possible criminal organization,” while the US Department of Justice went even further in their own press release, citing one top official as saying “[i]llegal streaming…feeds a criminal enterprise whose profits support organized crime endeavors.”

The operation led to the seizure of luxury cars, firearms, cash and credit cards, with bank documents revealing one individual was accruing annual profits of $17 million. Suspects generated their revenue by capturing signals to illegally re-transmit films, series and TV shows to their subscribers, while also running commercial advertisements on their pirated sites.

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Operation 404’s second phase builds on the achievements of its first phase in November 2019, when the carrying out of 30 search-and-seizure warrants across 12 states led to the suspension of 100 illegal content streaming applications and 210 websites, according to a press release.

It came six months after the US Trade Representative’s 2019 Report included Brazil on its “Watch List” for “long-standing concerns about Brazil’s Intellectual Property (IP) enforcement activities,” a list the country has remained on in the 2020 Report due to “levels of counterfeiting and piracy in Brazil, including online piracy and use of unlicensed software, remain[ing] excessively high.”

InSight Crime Analysis

Digital piracy is becoming an increasing priority for Brazilian law enforcement, who have sought to raise the profile of this illegal industry by linking it to traditional criminal groups. Yet evidence of such links remains minimal, particularly in the case of illegal streaming.

Americas Quarterly reported in 2019 that Brazil’s lost tax revenue from piracy of cable TV topped $1.2 billion in 2017, with the country’s roughly 2 million illegal streaming “black boxes” – essential for unlicensed viewing — being primarily manufactured in China, already set with “pirate friendly” configurations, and exported to Paraguay for smuggling across Latin America via well-travelled contraband routes.

But while Brazil has long been a hub for pirated DVDs and CDs, until recently openly sold by informal vendors in outdoor markets, this has mostly been a gray economy. According to Alexander Dent, chair of anthropology at George Washington University and author of a recent book on digital piracy in Brazil, it was the market’s criminalization by police crackdowns in the late 2000s that drew organized crime’s attention to digital counterfeiting.

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In São Paolo, the First Capital Command (Primeiro Comando da Capital – PCC) did become involved in extorting vendors of pirate DVDs, threatening those who would not pay, and a 2008 report claimed the PCC had supplemented their micro-trafficking activities with the pirating of DVDs and CDs. But the technological shift from pirating physical units to illegally accessing streaming services is likely to have curtailed that involvement.

And while there are recent reports that some of Brazil’s militias are involved in both installing pirated cable TV and extorting internet networks in neighborhoods, this appears to be a part of broader dynamics where these militias provide all essential services in areas under their control. Those arrested in Operation 404 predominantly seem to be lone entrepreneurs with digital skills rather than members of organized crime cells.

Furthermore, given the low barrier to entry and high profits of illegal re-transmission of entertainment content, law enforcement crackdowns are unlikely to be effective, Dent told InSight Crime. And the crackdown on informal vendors selling pirated DVDs has been “[expensive], has yielded a criminalization of a once entrepreneurial market, and has damaged the lives of many people,” he added.

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