A Brazilian judge blocked Facebook's funds in the country over a dispute surrounding Facebook-owned WhatsApp and local authorities investigating an international drug smuggling case.
A court order blocked roughly $6 million Facebook had in its Brazilian bank account as part of a dispute regarding WhatsApp encrypted data that local authorities are trying to access.
Brazilian news service Globo G1 reports that Facebook's funds were frozen after WhatsApp failed to provide the messages police were requesting in a drug case. According to federal authorities in Brazil, WhatsApp repeatedly defied orders to turn over the messages of users suspected to be part of an international cocaine smuggling ring, which they have been investigating since January.
Citing the police, G1 further reveals that without the WhatsApp data in question, it may be tough or even impossible to prove that those captured in recent raids are associated with others in Brazil, Paraguay, Bolivia and Spain.
Both WhatsApp and Facebook said they neither store nor access the metadata and messaging data that authorities are demanding. As a reminder, WhatsApp flipped the switch on full end-to-end encryption back in April, which means that users' messages remain encrypted to all parties - WhatsApp included.
WhatsApp has been having a tough time in Brazil for quite some time now, getting penalized for not turning over data. Back in May, for instance, WhatsApp got its second 48-hour ban in Brazil over its encrypted data.
"This decision punishes more than 100 million Brazilians who rely on our service to communicate [...] in order to force us to turn over information we repeatedly said we don't have," Facebook said at the time.
With the new financial penalties, Brazilian authorities have apparently found a way to penalize the company rather than its users.
The 19.5 million reais or $6.07 million frozen in Facebook's account in Brazil are equivalent to the fines WhatsApp has racked up for not complying with requests in the case. Since WhatsApp itself doesn't have any bank accounts in Brazil, authorities moved to freeze the funds of its parent company.
The legal tussle over encryption echoes the controversial dispute Apple had with the FBI, when the iPhone maker repeatedly refused to create a backdoor for authorities requesting access to the iPhone of the San Bernardino shooter. The FBI eventually cracked the iPhone's encryption without Apple's help.
Similarly to Apple, WhatsApp stands firm on its position to protect user data through end-to-end encryption and refuses to weaken its security so that authorities would get backdoor access.