They're just shutting down their local offices in Brazil, which are primarily used to represent X legally.
This is happening because a Supreme Court judge is conducting an inquiry to persecute those he deems propagators of fake news. In most legal systems, it would be considered highly illegal for a judge to conduct an investigative inquiry. It is also illegal in Brazil, but the other members of Supreme Court authorized this inquiry ("in the name of democracy") and turned a blind eye for all its absurd consequences.
This judge doesn't need the prosecutor's office or any private individual to initiate the proceedings. The scope of this inquiry is very broad (fake news as a whole) and has no expiration date, making it potentially eternal. In some cases, he himself is supposedly a victim of fake news, which means this judge potentially occupies three roles: judge, prosecutor, and victim. As a result, ordinary citizens in Brazil can be "summoned" to the Supreme Court's jurisdiction immediately if the accusations are connected to this Fake News inquiry. Since the Supreme Court is the final jurisdiction for appeals, people unfortunate enough to get caught in this arbitrariness lose the right to appeal the decisions of a judge that is also the de facto prosecutor.
A few days ago, there were some leaks showing this judge's assistants being asked to write reports against some individuals and news organizations that the judge wants to prosecute. In one instance, where there was no wrongdoing to report about a certain right-wing newspaper, the judge replied to his assistant: "Just look for some spicy allegations and be creative". So this judge is using his superpowers to direct the investigation to serve his own ends, which mostly involves silencing critics of the Supreme Court and himself.
His most recent power trip involves sending secret orders to X's Brazilian legal offices, demanding some accounts be blocked, and asking for all information related to these accounts. The judge stipuled daily fines for disobedience. But X's Brazilian workers don't have direct control of which accounts are blocked or not, so they tried to appeal to the full Supreme Court judges (which so far has not responded), and no account was blocked or doxxed. The judge then raised the daily fines further and threatened to jail X's chief lawyer in Brazil, even though this lawyer has no control over what happens to X's accounts. It's as if he were threatening to arrest a lawyer for the supposed crimes of his client. To protect these workers from unfair arrests, Elon Musk laid off all workers from X's local offices in Brazil, effectively closing all operations in the country.
The site and the app will continue working until the judge comes up with some bullshit reason to order all Brazilian ISPs to block access to X's servers.
Is being a pro-free speech platform anti-democratic?
If you're trying to say that some of X's users are "threatening democracy," there are already laws in Brazil to address this without resorting to illegality.
The law states that platforms are only required to remove content by a court order, and the content to be removed must be specified. The Supreme Court judge I referred to earlier was blocking entire accounts, which amounts to "preventive censorship," clearly prohibited by the Brazilian Constitution.
Moreover, this judge created a parallel judicial system where he denies citizens the right to be tried by their local judges: the process goes directly to his desk, and he acts as both prosecutor and judge simultaneously. It's a gross violation of the principle of due process.
One of the basic elements of a democracy are three branches. In fact, democracy is an inherent instable system where these three branches must keep eachother in check. A natural concequence thereof is that every one of these three branches has the right to conduct and lead investigations.
That the courts can act proactive or reactive is more a cultural element then a core element of democracy. There are quite some countries where judges are part of the investigative process and can unilateral.
As Brazil, as a number of other countries in Latin America, has been in the situation in the past that both the gouvernement and the parlement are controlled by people with a .. euh .. not so good reputation on their democratic values, a judicial branch that acts in a more proactive manner should not be that IMHO unexptected.
The fines were applied under illegal pretenses. It's like a castle built on sand.
And X is not entirely safe from being blocked. The messaging app Telegram suffered similar judicial abuses by the same judge during the 2022 elections. Telegram did not have legal representation in Brazil, but the judge threatened to block Telegram in Brazil anyway if they did not establish an office to officially receive his orders there. Then he began his usual judicial harassment campaign against Telegram: secret orders to block dissidents, daily fines, summoning the company's representatives to testify before the Federal Police, and so on.
At the time, the Supreme Court was openly promoting a legislative bill that would facilitate their censorship efforts. In practice, this proposed law would dismantle the DMCA-like takedown request system that shields platforms from responsibility for user-generated content, something U.S. users take for granted. Please note how absurd it is for the judicial branch to sponsor a legislative bill: it blurs the separation of powers.
The same bill included provisions to appease big media conglomerates, as it would force Google to pay for news snippets on Google Search and Google News. It would also require Netflix to pay residuals to Brazilian actors, even if past contracts did not stipulate anything of the sort. And since the right-wing political spectrum would be the most negatively affected by a censored internet (traditional media is already pro-left), the left-wing portion of parliament also supported this bill. A large consortium was formed in defense of the bill: the Supreme Court, traditional media, artists, left-wing politicians, and the left-wing Executive government itself.
However, Google and Telegram opposed the bill as it interfered with their business and would incentivize arbitrary censorship. Both companies published prominent Op-Eds on their homepages, warning about the severe consequences of this bill. In Telegram's case, a message was sent to all users criticizing the bill. The Supreme Court judge was livid and ordered Google and Telegram to remove the Op-Eds, accusing them of political interference (as if the Supreme Court was not doing the same by advocating for the bill's approval). Note that there is no law forbidding companies from expressing their opinions on their platforms; the judge was simply unhinged and fabricated this accusation. The judge even summoned Google's local CEO to testify before the Federal Police to intimidate the company.