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August/September 2018 www.intellinews.com I Page 4
The ministry argued that by trying to comply with the Yarovaya Law, Russian tech companies will waste resources that could otherwise
be investment in the development of new technologies.
Since the Yarovaya Law was first discussed over two years ago, Russian tech companies have been pointing to exorbitant expenses they will have to incur if they fully comply with the legislation.
The internet company Rambler & Co., controlled by tycoon Alexander Mamut, calculated that compliance with the Yarovaya Law will cost it RUB14.4mn ($226,500) immediately and another RUB1.44mn ($22,650) a year.
However, Rambler & Co. is a relatively small player in the segment and doesn't run any social media or boast a huge number of users. Extra expenses incurred by bigger players, such as, for instance, Yandex or Mail.Ru Group, are expected to be way higher.
Storage of user data is estimated to cost RUB20mn ($314,600) per 500,000 users, according to the economic development ministry.
That would set back Mail.Ru Group, with 130mn users, RUB5.2bn ($81.8mn) and Yandex, with 90mn users, RUB3.6bn ($56.6mn).
Mobile giants will have to spend even more. Megafon earlier estimated the costs of compliance with the Yarovaya Law at RUB40bn ($629mn) over the next five years, and for MTS, that figure is projected to be about RUB60bn ($944mn). Vimpelcom said it will allocate RUB45bn ($708mn) through 2023, of which RUB6bn ($94mn) will have to be spent in 2018.
Under the communications ministry's rules, online companies have to store at least two copies of any piece of information, and in case of online broadcasts accessed by several users, they
would have to store multiple copies of the same recording.
In addition, the economic development industry argues that the regulations don't differentiate between larger and smaller companies, forcing the latter to purchase the same kind of expensive equipment.
The ministry suggested that the regulations should be substantially revised before online companies are made to comply with them.
Meanwhile, some local companies are trying to cash in on Yarovaya law by offering data storage services.
In early August, state-controlled telecom giant Rostelecom suggested it could rent out its data processing centres to other operators for storage of user data, Vedomosti reported.
Rostelecom's first customer for this kinds of service is likely to be mobile phone operator T2 RTK Holding, which provides services under the brand Tele2.
No numbers are available at this point, so, it's not clear if renting out data storage capabilities to other companies will allow Rostelecom to cover its own expenditures on compliance with the Yarovaya Law.
The company's president Mikhail Oseyevsky was quoted by Vedomosti as saying that "no one will profit on the Yarovaya Law, everyone will see losses."
Another Russian telecom company, Transtele- com, is also considering renting out data storage capacities to smaller companies. However, in addition to rental fees, the latter will still have to invest in equipment for recording calls and text messages. For some companies those invest- ments would be comparable with their revenues.