Which I think is insane as well. My criticism is not limited to Brazil.
Companies should beholden to the laws of the places they reside. Not everywhere that has internet access.
My belief is slightly different: companies should be beholden to the laws of the places they trade (or do business, or earn income). I think it's both moral and pragmatic in a real politik way (he who pays the piper and all that). If a company thinks it can get away with ignoring the laws and at the same time benefiting from the same country, they shouldn't be surprised to find themselves cut off.
This is why US companies are bending over backwards to onerous demands by the Chinese gvt (and following Chinese laws) in order to gain access to the humongous Chinese market. Money talks, and the Brazilian judge 'hacked' the legal limitations: I consider this to be an extra-territorial contempt of court sanction. It is well within Whatsapp's legal rights to keep ignoring this, but it wouldn't be advisable with the 1m subscriber bonus to its competitor.
It's worse than that - only American laws are applicable on the internet world-wide, and most of HN is fine with that without any second thought.
The US has never been shy applying its laws abroad, with numerous examples: domain name seizures with the tenuous nexus being "Domain Registrar is a US entity", prosecution of the Pirate Bay and Kim Dotcom, the TPP.
Brazil intends to take action that only applies within its borders and suddenly the sky is falling, all because it's against an American company.