I hate this sort of authoritarian double speak. Expanding the speech you can say could violate fundamental rights?
Perhaps this is what the government is waiting for, but from what we've seen so far with the Musk x Moraes fight is, Zuckerberg should think twice before removing any hate speech and fake news safeguards his platforms have, otherwise they will be banned from operating in the country.
Some analysts from the supreme court also said that the end of this fact checking program can be considered as a violation of the internet law in Brazil [0]
Besides, the solicitor's general office is going to hold a public hearing about the changes to Meta's policies [1]
[0] https://www.cnnbrasil.com.br/blogs/luisa-martins/politica/fi...
[1] https://www.cnnbrasil.com.br/politica/agu-adia-audiencia-pub...
And to answer your question, they are not just expanding the speech. Don't mistake free speech with freedom of aggression, and also keep in mind Brazil is not a lawless world like the US is, we are more civil than that.
The thing is, for now, Marco Civil law, kinda let the so called "providers" not liable for users content posts, but that's likely to change on a Supreme Court decision that is happening about the Art 19 of Marco Civil. It's similar to U.S Section 230.
That said, if the platforms rules ALLOW homophobic speech literally, as they did, I'm pretty sure that would be illegal even with current legislation, because this wouldn't be a "bad moderation, would be a "no moderation", it was a choice of the company to allow that speech.
It's not even a democracy to begin with. Supreme court is the true seat of power. Doesn't matter what the constitution says. The law is what these 100% unelected guys say it is.
I've seen those supreme court judges persecute some youtuber because he called one of them fat.
And speaking of doublespeak, the quote you posted says "violation of laws that protect fundamental rights," not "violation of fundamental rights."