Russia passes law that fines tech companies without offices
The new bill can fine tech companies up to 10% of their turnover
Last year, the state regulator directed 13 companies to comply with its orders
Only a few companies have complied or met the minimum regulatory requirements
Lawmakers in Russia, on Tuesday, approved a bill enabling stricter fines against foreign tech companies should they fail to open an office in the country, according to a Reuters report.
Companies with more than 500,000 daily users had to have offices in Russia since July 2021, or risk penalties ranging from fines to outright bans. Since the country’s invasion of Ukraine in February this year, its government has cracked down on foreign tech companies in a bid to control information flow. The bill which was passed in the State Duma, the Russian lower House, can sanction companies 10% of their turnover but can go as high as 20% for repeat offenders.
Fines that were issued to Google and Meta for hosting content Russia deems illegal will now also apply to companies without offices in the country. In May this year, Google’s Russian subsidiary had to file for bankruptcy after the government seized its bank accounts, leaving the platform unable to pay its staff. Last November, state regulator Roskomnadzor directed 13 companies (mostly US-based) to set up offices in the country. Only four have thus far.
Apple, Spotify, Viber and Likeme have offices in Russia. However, Spotify pulled their services after the Russian invasion of Ukraine and closed office in March. Meta, was pulled from the listing after a Moscow court found the company guilty of “extremist activity” and refused to remove the tag despite an appeal. Google, Twitter, TikTok and Zoom have met some of Roskomnadzor requirements, whereas others, like Twitch, Discord and Pinterest have made no efforts to comply.
The move is another in a series of attempts by the Russian government to make doing business in the country a hassle. Late last month, the country had fined Twitch, United Parcel Service, Pinterest and Airbnb for failing to store Russian citizens’ data on servers in the country.