One day in August 2024, a satellite internet provider that beams Wi-Fi down from space discovered that its bank accounts in Brazil had been frozen — for the sins of a social network with which it formally had nothing to do.
Every legal drama has a moment when one side takes a step that turns a dispute into an avalanche. For the platform X (formerly Twitter), that step was the decision not to appoint a legal representative in Brazil. Brazil’s internet law — the “Marco Civil da Internet,” adopted back in 2014, and the decree issued to implement it — requires foreign internet platforms operating in the country to have a local representative capable of receiving court notices and complying with orders. Without one, the court finds itself like a person calling an empty apartment: the door is shut, the subscriber unavailable, and the summons flies off into nowhere.
By the summer of 2024, the conflict between X and the Brazilian justice system already had a long backstory. Supreme Federal Court (STF) Justice Alexandre de Moraes — a figure some call a guardian of democracy and others criticize for excessive harshness — was leading investigations related to the spread of disinformation and the undermining of democratic institutions. As part of those investigations, the court issued orders to block specific accounts on the platform. X ignored them. Fines for noncompliance piled up, and X had no intention of paying.
When the company also withdrew its legal representative from the country, the court lost its last formal channel of communication. It was a gesture that, in diplomacy, is called “recalling the ambassador.” The difference is that states close embassies at moments of extreme escalation, while here a commercial platform was effectively telling a sovereign state: we will not speak to you on your terms. On August 29, 2024, de Moraes responded — and the blow landed on a company that had taken no part in the dispute.
The judge froze Starlink’s accounts in Brazil. A company that launches satellites into low Earth orbit and sells internet subscriptions to farmers in the Amazon, fishermen along the coast of Bahia, and residents of remote communities where cable infrastructure is science fiction from another life. What does Starlink have to do with it? Formally — nothing. Starlink is a subsidiary of SpaceX. X (formerly Twitter) is a separate legal entity. There is no direct corporate ownership between them. They are united by one person: Elon Musk, who controls both companies.
The legal instrument de Moraes used has a name that sounds almost poetic: “piercing the corporate veil” — desconsideração da personalidade jurídica. In Brazilian law, it is enshrined in Article 50 of the Civil Code. The doctrine is simple: if a legal entity is used to abuse rights, evade obligations, or conceal assets, a court may “pierce” the shell of the corporate structure and reach the real beneficiaries or affiliated companies. Roughly speaking, the law says: if the same owner is sitting behind two doors, you cannot hide money behind the second one while pretending the first has nothing to do with it.
What strikes me is the boldness of this move. The doctrine of piercing the corporate veil exists in many jurisdictions — in American law, it is known as piercing the corporate veil — but it is usually applied within a single corporate group: a parent company is liable for a subsidiary, or vice versa. Here, the court linked two companies with no parent-subsidiary relationship on the grounds that they formed a “de facto economic group” managed by one person. It was an expansive interpretation — and Brazilian lawyers criticized it.
On September 13, 2024, Brazil’s Supreme Federal Court took the next step: it ordered 18.3 million reais (at the time, around $3.3 million) to be transferred from the frozen accounts of X and Starlink into the state budget. The money was meant to forcibly settle fines imposed on the social network for systematically failing to comply with court orders to block accounts. The formula was simple: you will not pay voluntarily — we will take it ourselves, wherever we find it.
For Starlink, it was a reputational blow in a country where the company was actively expanding its presence. Brazil is the world’s fourth-largest internet market by population, yet also a country with colossal territories where terrestrial communications infrastructure is absent or works disastrously badly. The Amazon Basin, the northeastern sertões, tens of thousands of kilometers of coastline — all of it is a potential customer base for satellite internet. Starlink had received a license from Brazil’s telecommunications regulator, Anatel, and was already serving subscribers. And now its financial assets in the country had become hostages in a conflict to which it was not a party.
Starlink’s response was predictable: the company said the decision was illegal, that it was a separate legal entity and should not bear responsibility for X’s obligations. The argument for corporate autonomy is one of the fundamental principles of commercial law. Every legal entity is a separate “pocket”: the debts in one pocket do not spill into another. But the Brazilian court, in essence, said: when both pockets are sewn onto the same pair of pants, the divider between them is a convention.
This story is a whetstone on which several things are tested at once. First: can a nation-state effectively compel a global technology company to obey its laws? The second question is sharper: how far does a court’s authority extend when the defendant controls infrastructure on which that same state’s citizens depend?
Satellite internet is a special kind of infrastructure. A cable can be cut, a server unplugged, a data center sealed off. A satellite flies at an altitude of 550 kilometers at a speed of around 27,000 km/h, and it has no Brazilian visa. Users’ ground terminals, of course, are located within the country, and the gateway stations through which traffic enters the backbone internet also stand on Brazilian soil. But the signal itself comes from orbit, and orbit is a space governed by international treaties, not the national legislation of a single country.
Here arises a paradox that, I suspect, gives international-law specialists a touch of vertigo. Brazil needs Starlink — for connectivity in remote regions, for bringing millions of people into the digital world, for emergency services to function. And at the same time, Brazil is seizing Starlink’s accounts, calling the company’s commercial viability in the country into question. It is like a city fining its only water company so heavily that it may leave — and then finding itself without water. Still, Starlink assured customers that the account freeze would not stop the service: the satellites kept working, subscribers kept getting a signal.
At the center of the entire structure is Elon Musk. It was precisely his position as the controlling figure behind both X and SpaceX (and, through it, Starlink) that allowed the court to draw a line between the two companies. Musk is not merely a shareholder. He acquired Twitter in October 2022 for roughly $44 billion, renamed the platform, radically cut its staff, and turned moderation policy into a matter of personal conviction. He founded SpaceX in 2002 and remains its CEO and largest shareholder. The two companies are legally separate, but connected through one man who makes the key decisions in both.
The doctrine of piercing the corporate veil is generally applied when investigators uncover commingled assets, sham transactions, or the use of one company as a front for another. Here, the court essentially said: the very fact that a single individual controls both structures and uses one of them to evade the obligations of the other — by withdrawing the legal representative and refusing to pay fines — is enough to merge their liability.
Musk reacted in his usual style — with public posts on X, where he called de Moraes a “dictator” and compared the situation to authoritarian censorship. That rhetoric, regardless of how justified it was, had a concrete legal consequence: it strengthened the court’s position, which could point out that the platform’s owner was personally and demonstratively obstructing the enforcement of judicial decisions — and that, therefore, the corporate autonomy of his companies was being used as an instrument of that obstruction.
By early October 2024, the situation had turned around. X appointed a new legal representative in Brazil, paid the accumulated fines, and complied with the orders to block accounts. On October 8, the STF authorized the platform’s return to operation in the country, after more than forty days of suspension. Starlink, for its part, continued operating — satellites do not know about court rulings; they simply fly and transmit data.
But the precedent remained. The Brazilian court demonstrated that it was prepared to view a collection of companies controlled by one person as a single economic organism — even in the absence of formal corporate ties between them. For global technology conglomerates, where a single founder or fund controls dozens of legal entities across different industries and jurisdictions, this is a signal that is hard to ignore. If tomorrow some court in another country decides that the car company Tesla must answer for X’s fines on the same grounds, de Moraes’s precedent will be the first one cited.
There are things this story did not resolve. Where is the line between lawful compulsion and pressure on infrastructure that people uninvolved in the dispute depend upon? What degree of proof is required to establish a “de facto economic group” — is a common owner enough, or must there be evidence of commingled finances? And what is a state to do if a satellite operator simply leaves the country and keeps broadcasting from above, because radio waves do not stop at the border?
For now, Starlink is operating in Brazil, X is once again available to Brazilian users, and 18.3 million reais have gone into the budget — quietly, the way money always goes when the court has already decided everything and it is too late to argue.