This fight has been brewing for a while, as the Brazilian government has been demanding information from Google on certain users of its Orkut social networking site, which is used mostly by Brazilians. Now, Brazil is officially suing Google for failing to comply, and is also beginning procedures to shut down its local office in Brazil. Of course, there are a few problems with this lawsuit. First, when presented with the proper evidence, Google did shut down parts of Orkut that were being used for illegal activity. However, much more problematic is that Google has pointed out that Brazil keeps pressuring the company's Brazilian office, which is only an ad sales office and has nothing to do with Orkut at all. Google has noted repeatedly that Orkut is entirely run on U.S. soil, and therefore is subject to U.S., not Brazilian, laws. It seems a little unfair for Brazil to be punishing a totally unrelated Brazilian office just because it's what's there.
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