Regulation

Putin's Next Invasion? The Russian Web


Google (GOOG) Executive Chairman Eric Schmidt warned last year that Russia was “on the path” toward Chinese-style Internet censorship. Vladimir Putin is proving him right. At a meeting with media executives in St. Petersburg on April 24, the Russian president said his government will impose greater control over information flowing through the Internet, which the former KGB lieutenant colonel has called a creation of U.S. spy agencies.

Russia’s Parliament has approved a law similar to China’s that would require Internet companies such as Google to locate servers handling Russian traffic inside the country and store user data locally for six months. The legislation, which is scheduled to take effect on Aug. 1, also classifies the roughly 30,000 Russian bloggers who have 3,000 or more readers as media outlets, making them and the companies that host them subject to regulation. “This law is a step toward segmenting and nationalizing the Internet and putting it under the Kremlin’s control,” says Matthew Schaaf, a program officer at Freedom House, a research group in Washington. “It could have a serious chilling effect on online expression in Russia, making users stop to think how their Google searches and Facebook posts could be used against them.”

Russian intelligence agencies, like their U.S. counterparts, constantly expand their online capabilities, Putin said at the April 24 meeting, adding that Russia must protect its information in a field dominated by U.S. companies. The bill on retaining user data follows a law enacted on Feb. 1 that gives Russia’s communications regulator, Roskomnadzor, the power to block, without a court ruling, websites deemed “extremist” or a threat to public order.

Roskomnadzor did that on March 13, when it temporarily shut off access to a half-dozen sites, including that of opposition leader Alexei Navalny, that people were using to organize unsanctioned rallies against Putin’s annexation of Crimea. The regulator also shut down the pages of 13 Ukrainian groups on VKontakte, a Russian site similar to Facebook (FB). “Putin sees a major threat to his rule from the U.S., with Ukraine being just the latest reason to attempt to discredit him,” says Alexei Mukhin, head of the Center for Political Information, a research group in Moscow. For Putin, “it has turned into a personal vendetta, so restricting the Internet is a necessary measure,” Mukhin says.

Russian agencies have been pressuring Internet companies for data on Ukrainians who supported the February ouster of that country’s Kremlin-backed president, Viktor Yanukovych, says VKontakte founder Pavel Durov. On April 16, Durov, who started the social networking company in 2006, said he had sold his shares and stepped down as chief executive officer rather than comply with demands to turn over user data. “I no longer have a stake, but I have something more important—a clean conscience and ideals that I’m willing to defend,” Durov wrote on his VKontakte page.

For foreign companies, relocating servers to Russia may not be worth the investment, so their services might no longer be available to Russians, says Karen Kazaryan, an analyst at the Russian Association for Electronic Communications. Building data centers could cost companies as large as Google and Facebook as much as $200 million, Kazaryan estimates, and maintaining six months of data on every user might add $10 million more a year. Google and Facebook declined to comment.

Dmitry Grishin, CEO of billionaire Alisher Usmanov’s Mail.ru Group, which owns VKontakte and social network Odnoklassniki, says, “The move toward excessive regulation of the Web will lead to Russia losing the Internet as a unique sector that could’ve become a growth area for a new, postindustrial economy.” Russia is one of the few countries where domestic companies beat U.S. competitors in search, e-mail, social networks, and games; both VKontakte and Odnoklassniki are more popular than Facebook there.

What worries Internet freedom advocates is the precedent Russia is helping to set, says Peter Micek, a policy counsel for Access, an Internet advocacy group in New York. “Many governments want to clamp down on what happens online,” he says. “Our concern is that these questionable ‘nationalized’ approaches to Internet regulation risk spreading quickly.”

The bottom line: Russia may require Internet companies to store traffic data locally and shut down opposition Web pages or blogs.

Khrennikov is a reporter for Bloomberg News in Moscow.
Ustinova is a reporter for Bloomberg News in Chicago.

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