Beginning in September a new Russian law — the Personal Data Law — will require international Internet firms with Russian customers to process and store data about them on Russian servers.
Ostensibly, this is intended to protect Russian citizens’ privacy. In fact, its purpose is to gain government access to that privacy and to cramp the competition of international Internet companies.
By forcing the likes of Google, Facebook, Twitter, Apple and Microsoft to store personal communications and data of their Russian customers inside Russia, the country’s security services will have immediate access to that information.
Paranoia apparently played a role in the legislation. Russian leader Vladimir Putin said in an April television talk program, “The Internet began when [it] appeared as a special CIA project and is still being developed that way.” Mr. Putin has also referred to it as a CIA “front” and that nothing coming from the Americans can be trusted.
Originally, the law was to take effect in January; however, Internet-freedom advocates raised such a rumpus that the date was pushed out to Sept. 1.
The law will harm Russia’s estimated 76 million Internet users. For example, it will disrupt travel planning of those who rely on online services such as international airline ticketing, hotel bookings and payment — even visa services.
The law will also hurt the already-weakened Russian economy, according to a new report by the European Centre for International Political Economy (ECIPE). It estimates the law will cut $5.7 billion off the country’s gross domestic product.
ECIPE’s report states, “Investments in the Russian economy would drop by 1.4 percent, with considerable effects on employment . It is unlikely that losses of such scale could be compensated and offset by a few jobs created in [Russian] data processing.”
If the non-Russian companies now providing these services were to comply with the law and move their Russian data to in-country servers, the cost would have to be passed on to their customers. And there may not be enough time between now and September for these countries to rent Russian servers, let alone build new ones.
Several Western Internet companies have already decided to leave what had been a growing market. Microsoft began the move with the announcement it would move its Skype development office from Moscow to Prague. Adobe has ceased its Russian operations.
The popular music-streaming service Spotify, based in Sweden, has canceled plans to launch a Russian service. The Russian business daily RBK cites as the reasons the new Personal Data Law, along with Russia’s declining economy and ruble.
Google, while insisting it is still committed to its Russian users, has announced it is closing its engineering office in Moscow. The new law was not mentioned in its announcement, but must have figured strongly in this decision.
All these companies have had to weigh the cost of converting to this new mandate in relation to present and potential revenue. There is the cost of segregating Russian data from the rest; the cost of renting a new batch of servers; and the time- and labor-consuming cost of software reprogramming.
The office of the United States Trade Representative says of the Russian Personal Data Law that it would “affect a broad range of cross-border services.”
This law can be seen as an extension of the Kremlin’s strategy to clamp down on free speech. Ever since the arrival of Edward Snowden in Moscow, after his theft and publication of classified U.S. government data, the Russian government has been steadily restricting media freedom. It has banned foreign interests from obtaining majority ownership of any mass medium and is developing new laws to extend restrictions on “promoting extremism” to extend to bloggers as well as news websites and publications.
Peter Hannaford was closely associated with the late President Reagan for a number of years. He is a member of the board of the Committee on the Present Danger. His latest book is ◼ “Presidential Retreats.”
