1 August 2014

Internet Regulation: Business in the Crosshairs

By Irina Pecherina, Account Manager, Government Relations, PBN H+K Strategies, Moscow

The bill forcing Internet sites to store personal data of Russian citizens in-country was signed into law on July 22. Online companies, including well-known firms such as Google, Facebook and Twitter, will have until September 2016, when the law takes effect, to meet the requirement. Internet companies will be required to move data on Russian users onto servers based in the Russian Federation or potentially face being blocked in the country. Legislators say the new law will encourage better data protection for Russian citizens.
Internet Regulation: Business in the Crosshairs
“Data about Russian citizens, their electronic mail, information entered when registering on various websites and social networks, are in many cases stored abroad,” bill author State Duma Deputy Vadim Dengin told Izvestia newspaper. “That data can be used against the country as well as against a specific individual. We want large Internet corporations — search engines, mail services, social networks and so on — to store information about Russians in data centers on the territory of our country.”
The measure came soon after new rules requiring bloggers attracting more than 3,000 daily visits to register with government communications watchdog Roskomnadzor. The so-called blogger law, which legislators say clearly spells out “the rights and responsibilities of bloggers” comes into force on August 1.
For the first time, bloggers will have the right to legally place adverts on blogs – a point the authorities have been discussing for the last two years. They also face additional requirements, such as having to post their personal contact information online and carefully verify the information they publish.
The second part of the “blogger law” obliges “the organizers of information distribution on the Internet” to store information about users and their activities for six months on Russian territory and to provide this information to investigators, a provision experts say will directly impact the IT industry. Information required for storage includes images, text, sound recordings and audio information.
Regarding imminent amendments to antipiracy laws, which currently only ban online distribution of cinema and TV films, it’s worth noting that amendments have been passed in the second reading and that further discussions will continue during the fall session of the lower house of parliament. A way to expand the scope of the law to include all types of content was discussed at the last plenary session on July 4.

What does all this new regulation mean and why now?

  • Localization and investing in infrastructure. The personal data law appears to be designed to encourage foreign companies to use domestic technologies and to bring investment into the country’s infrastructure. Another unstated goal is to localize international business in Russia.
  • National security a priority. Against the backdrop of the current geopolitical tensions and revelations that the Internet accounts of leaders of several countries are being hacked and information used against them, national security is becoming increasingly the end goal of Internet regulation.
  • End of Internet anonymity. The Russian authorities appear to be increasingly leaning towards wanting to introduce personal responsibility for information posted online. This can be seen both in the blogger law and in attempts to impose fines on users for sharing pirated content.
  • Banned offline means banned online. Russian legislators have been trying to devise a means to ensure that people act online as they would offline. Various regulatory initiatives, including efforts to protect intellectual property through the antipiracy law and the ban on the use of foul language and slander, all point in this direction.
Some of these trends are signs that online companies willing to operate in Russia without a physical or legal presence will face new challenges in the future. The latest regulatory changes will clearly impose a significant financial burden on online companies because of requirements for local data storage. And if past practices are anything to go by, it is expected that these trends will likely underpin all new regulations and bylaws going forward.