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Facebook, Google Face Brazil Storage Mandate on Snowden Leak

Sept. 17 (Bloomberg) -- Brazil’s government is threatening to force Internet service companies such as Google Inc. and Facebook Inc. to set up local data storage centers following allegations the U.S. probed President Dilma Rousseff’s e-mails.

Internet service companies would have to follow Brazilian privacy laws and the government may also decide to store sensitive data such as tax information within the country to protect it from foreign spies, Internet Policy Secretary Virgilio Almeida told reporters in Brasilia yesterday. He spoke after a meeting between industry representatives and Rousseff.

“Brazil has one of the largest IT markets in the world,” Almeida said. “It’s natural that companies have part of their infrastructure in the country.”

The measures designed to protect privacy come in response to allegations that the U.S. National Security Agency used software to access communications between Rousseff and staff members. Rousseff today called off a state visit to Washington next month in retaliation for the alleged intrusions, saying in a statement published by her press office the trip may take place if the U.S. government offers satisfactory explanations regarding the allegations.

Forcing Internet companies to store user data in the South American country threatens to deny Brazilians access to some services provided by foreign companies, Google spokeswoman Flavia Sekles said in an e-mailed response to questions today. Facebook’s press office declined to comment on the possible new requirements when contacted by e-mail.

‘Unacceptable’

Foreign Minister Luiz Alberto Figueiredo on Sept. 2 called the alleged spying “inadmissible and unacceptable” and is demanding the U.S. provide an explanation.

“We carry out intelligence like just about every other country around the world,” U.S. Deputy National Security Adviser Ben Rhodes told reporters earlier this month about the allegations. “If there are concerns we can address, consistent with our national security requirements, we will aim to do so.”

The spying allegations were made Sept. 1 on Brazil’s most-watched TV news show, “Fantastico,” by U.S. journalist Glenn Greenwald. He cited secret documents obtained from fugitive security analyst Edward Snowden in May.

“Fantastico” reported on Sept. 8 the U.S. also spied on Brazil’s state-controlled oil company, Petroleo Brasileiro SA, citing classified documents made available by Snowden.

Communications Minister Paulo Bernardo said Sept. 12 the government is considering developing locally-made network equipment that phone companies would be required to use as a defense against foreign spies. The government is studying measures to attract investment in Internet equipment, Almeida said yesterday.

Brazil, where Congress is preparing to discuss new Internet legislation to protect privacy, follows Germany in calling for a homegrown industry to avoid U.S. surveillance.

Telecommunications regulator Anatel said this month it’s investigating contracts between Brazilian operators and foreign companies. The focus is on the “main companies with the largest client bases,” the agency said.

To contact the reporters on this story: Arnaldo Galvao in Brasilia Newsroom at agalvao1@bloomberg.net; Raymond Colitt in Brasilia Newsroom at rcolitt@bloomberg.net

To contact the editor responsible for this story: Andre Soliani at asoliani@bloomberg.net

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