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“If Twitter doesn’t comply with Roskomnadzor and Russian legislation’s requirements, then we will consider the issue of completely blocking the service in Russia,” he warned.
The watchdog says the banned content at the centre of
the conflict involves more than 3,000 posts containing information about suicide, child pornography and drugs that had apparently remained online since 2017. Polls say a mere 3% of Russians use Twitter.
President Vladimir Putin last month raised fines for social media giants accused of “discriminating” against Russian media. On New Year’s Eve, he granted Roskomnadzor the power to block social media platforms if they are found to “discriminate” against Russian media.
Putin accused social media giants in January of “controlling society” and “restricting the right to freely express viewpoints.” Russia previously banned the social networking website LinkedIn for failing to store users’ data on Russian servers
and, more recently, reversed a decision to ban the Telegram messaging app after a two-year attempt to block it.
Good for business
The Kremlin is trying to increase its control over the Russian internet, but at the same time it is in effect putting in protectionist measures in order to give its domestic tech industry a boost.
The government is fully aware that tech is an extremely valuable business and can earn significant export revenues. Russia is already a major producer of games, such as the runaway success of World of Tanks, among other games, and is a major centre of software outsourcing.
Moreover, since its IPO almost a decade ago Yandex’s market capitalisation has more than doubled to $23bn, making it
by far the most valuable tech company in Europe – western Europe included.
At the same time the e-commerce market leader Wildberries has seen revenues soar to become the biggest clothing, apparel and accessory retailer in Russia in 2019 – the first time an e-commerce company has become number one in any retail segment – making its owner Tatiana Bakalchuk Russia’s second ever female billionaire. Already dominant in its home market this year Wildberries has started to aggressively roll out it services in the “near abroad” countries of the Commonwealth of Independent States (CIS) and now increasingly it is moving into the EU.
Wildberries launched in Italy, France and Spain this month, following on from a German launch in January. Last year it set up shop in Israel, Ukraine, Slovakia, Poland and Kazakhstan amongst other markets.
The Kremlin is keen to see its tech business continue its growth and expansion, largely to limit the dominance of the US-based
tech giants. Yandex already leads in the Russian speaking world for internet searches, while sites like vKontakte.
ru rival Facebook in the social media sphere and Russian- conceived Telegram message service in the messaging App space – although after the showdown with the government Telegram is now based in the UAE and objects to being called a “Russian” company.
As part of this protectionism, that has worked so well to boost Russia’s agricultural sector since 2014, the Kremlin is forcing international internet companies to keep their user data in servers physically located on Russian territory and now is pushing for these firms to set up offices in Russia where they will be liable to Russian laws and taxes.
The latest in Russian tech protectionism, the government is considering implementing a new tax on foreign IT firms that use consumer data for advertising that has been dubbed the Google Tax 2.0. This tax follows on from the “law against Apple” that forces the US phone maker to pre-install Russian apps on all the phones it sells in Russia. Apple usually refuses to pre-install third party apps on its phones and threatened to leave Russia as a result, but eventually climbed down with a compromise. When users first turn on a new Apple device purchased in Russia, they will see a dialogue prompting them to install applications from the government’s list.
The user can opt out of installation, however, by de-selecting the Russian apps.
And the government has also levied a bevvy of other taxes on foreign online businesses.
On the flip side the state has offered Russian tech companies significant tax breaks and is also easing the regulatory inspection regime to make their life easier.
“Russia’s tech companies may be exempt from undergoing annual inspections by Russia’s fire, labor, social security, and health watchdogs. The moratorium on inspections has been included in the second support package for the tech sector, which is currently undergoing review by deputy PM Dmitry Chernyshenko,” BMB Russia reports. “If the government approves the idea, it may be enacted by this fall. The goal
of the moratorium, which was first proposed by industry participants, is to create more comfortable business conditions in the tech sector. Officials are eager not to let the large tax breaks of the first package, which slashed social security taxes from 14% to 7.6% and profit tax from 20% to 3%, go to waste due to administrative and regulatory hurdles.”
It is not going to stop there. Russia’s digital ministry is considering expanding the law against Apple by requiring that manufacturers also install a domestic search engine as the default provider on the selected Russian browser. The government will decide which search engine is required, but the likely beneficiary is Yandex, reports BMB Russia. As of late 2020, Yandex’s search engine accounted for 60% of the Russian market, while Google made up 38%.
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