When Big Tech chokes a continent

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Hi Diogenes,

US tech giants want to extract everything they possibly can from South America. Data, knowledge and natural resources are all up for grabs and the cost to the nations they strip them from seems to be of very little concern.

And while the devastation may begin in South America, the repercussions could well be felt across the entire planet.

FEATURED STORY

South America's sovereignty is being lost in Big Tech's clouds

Cecili Rikap

Around a year ago, in August 2024, Brazil launched its pioneering Artificial Intelligence Plan (PBIA), aiming to advance local and public AI solutions with relative independence from US tech giants, including by developing its own data centres. Less than a year later, little remains of this initial goal of digital sovereignty.

With the exponential adoption of AI around the world, we are also seeing an equally impressive global increase in data centres, which serve two purposes: storing data and processing computing services, from any software solutions to AI models.

While the vast majority of these centres are in the US, which reportedly has more than 5,000, Brazil is leading the way in Latin America, with 187 data centres (public and private), and the country ranks eleventh globally.

As soon as the PBIA was launched, the US digital giants leading the expansion of data centres doubled down on their efforts to dominate the Brazilian market.

Less than a month later, Microsoft announced a $2.7bn investment in cloud and AI infrastructure in Brazil, which it used to lobby for a more favourable policy agenda in private talks with the government.

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Amazon, meanwhile, sped up its efforts to establish cloud agreements with Brazilian public firms, including the Federal Data Processing Service (SERPRO), Brazil's largest state-owned IT services company.

Now, PBIA's initial guidelines are being revised. In November, the Brazilian government accepted a proposal from SERPRO – in alliance with Amazon, Google and other US tech giants – to migrate data to foreign companies' clouds, building an intermediate layer that is intended to encrypt and protect sensitive data.

Even assuming that this layer ensures the protection of data held by the public sector, the government will remain structurally dependent on digital services provided by companies such as Amazon and Microsoft.

In other words, the government has resigned itself to being locked into services that are virtually impossible to escape, intensifying the use of technology monopolised by a handful of foreign corporations.

Meanwhile, away from the public and without holding open hearings, the Ministry of Finance, in talks with the Ministry of Development, Industry, Trade and Services, was developing its plan to attract more data centres through a policy that has been praised by Silicon Valley companies.

The policy is an executive decree that has not yet been sent to Congress for approval. If passed, it will establish a special regime with tax and fee exemptions for importing up to 85% of the equipment needed to set up data centres.

With such a high proportion of imported equipment, data centres won't drive significant production in Brazil. The same is true for job creation.

Microsoft itself acknowledges that, once installed, a data centre doesn't require hiring more than 50 full-time staff members per building. Those who develop AI models or any IT solution access data centres via the Internet. In plain English, no one develops an AI model, platform or application sitting inside a data centre.

Perhaps worse still, the rules that the Brazilian government will impose on companies for access to this tax relief will actually benefit them.

Firms will be required to invest between 2% and 8% of their gross income in the National Fund for Industrial and Technological Development, aimed at promoting local innovation. But without the creation of a public cloud alternative to those of the digital giants, Brazilian start-ups that benefit from the fund will be forced to develop and offer their future digital initiatives using the clouds of Amazon, Microsoft or Google.

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The government also proposes to require 10% of the capacity of data centres installed in Brazil to be offered to local companies, which would mean promoting the migration of these companies to the clouds of foreign giants. In other words, the policy itself reinforces technological subordination by encouraging the expansion of the current digital ecosystem, already dependent on these technological giants.

Socio-environmental extractivism

Data centres also have a major socio-environmental impact, caused, among other factors, by their enormous consumption of energy and water.

One need only look at the environmental damage and the worsening living conditions of people who live near data centres in Ireland. The European nation established itself very early on as a magnet for these investments, and its population is now suffering the effects of a collapsed energy matrix, reportedly including higher energy prices as the centres increase consumption and demand.

This could happen, for example, in Caucaia, a municipality in the Fortaleza region of north-eastern Brazil, where the company that operates TikTok plans to build a data centre. The Intercept, a nonprofit news organisation, estimates this centre will have a daily energy consumption equal to that of2.2 million Brazilians.

This is a global problem. According to the United Nations Conference on Trade and Development, between 2018 and 2022, the 13 largest data centre operators' electricity consumption increased by 1.5 times, from 50 to 125 terawatt hours. Almost two-thirds of that consumption is accounted for by Amazon, Google and Microsoft, in that order.

Although they power their data centres with renewable sources – partially, because they keep fossil fuel reserves as a backup in case of supply interruptions –, these companies' business is based on encouraging consumers to use more and more services in their cloud. That renewable energy could instead be put to more important uses, such as public transport systems.

In terms of water consumption, in 2022, Microsoft's consumption grew by 34% and Google's by 22%. Google states in its environmental reports that it is increasing its water replenishment (from 6% in 2022 to 18% in 2023). But even discounting this replenishment, its net water consumption grew by 205% between 2016 and 2023.

In response to these concerns, the Brazilian government promised its policy would include environmental regulations. However, the promise is in doubt as the Ministry of the Environment is not being part of policy discussions.

The example of Chile

When it comes to environmental rules, we need to look at another South American country: Chile.

In December 2024, the Chilean Ministry of Science launched the National Data Centre Plan, with two somewhat contradictory goals: to promote economic growth and to regulate the industry, which has been setting up without control in the country's metropolitan region.

The main instrument of this plan was a territorial viewer, a digital tool designed to map almost 80 socio-environmental indicators and regulations for each square kilometre of the territory of Antofagasta, a region in the far north where plenty of energy is available, with plans to expand the mapping to a national scale.

This tool, which is now ready for implementation, makes it possible to identify areas where the socio-environmental impact of data centres would be lower. This viewer, which was designed entirely by the Chilean public administration, is an example of government capacity building and planning that would allow for more effective regulation.

However, as in Brazil, corporate pressures appear to have prevailed, calling into question whether this tool will be used effectively.

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In early June, Chile's Council of Ministers for Sustainability and Climate Change relaxed a requirement for data centres that store more flammable substances – diesel, in this case – to submit an environmental impact statement demonstrating compliance with all applicable environmental regulations. The council upped the minimum threshold for submitting an impact statement from 80,000 litres of flammable substance storage to one million litres, exempting virtually all existing and planned data centres in Chile.

Pressures and opportunities

The experiences of Chile and Brazil, countries with progressive governments, reflect at least two common features.

First, the digital giants have the same strategy for the region: to extract not only data but also knowledge and natural resources. Second, there is a lack of political courage on the part of progressive governments, which are subordinating themselves to investments of extractive mega-corporations.

Private data centres operating very much like foreign military bases on local territory are not a sign of progress or technological change. In the digital age, underdevelopment is measured by the number of gigabytes stored and processed in the clouds of a handful of companies. Inviting them to set up in the region is not sovereignty but digital dependence.

Ultimately, these governments should ask themselves how many data centres are really needed and where they should be located to ensure minimal social and environmental impact.

To answer these questions, they should involve citizens, tell them about the risks and pressures of large foreign and national companies, and coordinate actions with other countries in the region.

More and more voices are flagging the need for regional public data centres, managed autonomously by public institutions with broad community representation, but independent of business interests, particularly those of concentrated capital from the US and China.

This proposal, which today seems unachievable judging by the experiences of Brazil and Chile, could become real in Uruguay with the help of its public company, ANTEL, which is the country's leading telecommunications company.

ANTEL is responsible for developing digital infrastructure, supplying Internet access to 94% of Uruguayan households, and providing fibre optic connections to 99% of those households.

Uruguay's new government's programme includes migrating all decentralised data and systems from the public administration to an ANTEL cloud. This is a challenge for ANTEL itself, which already has commercial links with Google.

Judging by Brazil's experience, ANTEL will need full government support to develop technology that doesn't end up depending on services from this US giant. If this project comes to fruition, and to the extent that ANTEL develops services based on free software and in collaboration with the University of the Republic, it could serve as a beacon for the region.

Brazil has public companies that could collaborate with ANTEL in setting up similar technology. Adapted to Brazilian territory, the viewer developed by the Chilean Ministry of Science could be used to define where to set up these data centres. It could even be connected to other public data centres, such as those of ANTEL in Uruguay, to make more efficient use of the capacity installed in the region.

But this would require Brazilian public companies, such as the Federal Data Processing Service, to cut their ties with the US and Chinese giants.

This decision does not depend on technical feasibility. The region has the capacity to install data centres and provide digital services to public administrations, tapping the knowledge and talent of its public universities.

What is needed is political will. Funding is also needed to set limits and regulate abuses of power by foreign technology giants – and their Latin American partners, such as Mercado Libre, the region's leading e-commerce technology company – and to develop public and open technology for the public sector and citizens.provide digital services to public administrations, tapping the knowledge and talent of its public universities.