By Sam Schechner And Olga Razumovskaya
Russia is postponing a showdown with a handful of U.S. tech
titans, including Facebook Inc., over putting data centers on
Russian soil, handing an interim victory to tech companies that
have resisted the divisive new rule.
Ahead of a new law that goes into effect on Tuesday requiring
companies to store and process data about Russian users within the
country's borders, Russian regulators have told companies such as
Facebook, Google Inc. and Twitter Inc. that they don't plan to
check until at least January whether the companies are in
compliance, tech executives and Russian officials said.
The three companies have so far either told officials they won't
have new data centers on Russian soil in the immediate future, or
haven't made clear whether they plan to comply, some of the tech
executives said. But Russian officials provided a loophole when
they said these companies weren't on the list of those the Russian
communications regulator Roskomnadzor was planning to check before
2016.
"We understand that in transnational companies where offices are
spread globally, it takes a while to make a decision," said Vadim
Ampelonsky, spokesman for the regulator, adding that checking up on
companies like Google would take resources the regulator doesn't
have. "There's only that much we can physically do."
Russia's regulatory stance eases immediate pressure on big U.S.
technology firms involved in social media and messaging to
implement rules that Russia says are meant to ensure privacy for
Russians, but critics say could be a back door to government
surveillance.
While it is unclear whether Russian regulators will later move
to enforce the new law against the U.S. firms, their initial
reluctance to do so illustrates how difficult it can be for
governments to exercise control over U.S. tech superpowers when it
comes to the sensitive issue of where they locate their data and
who has access to it.
Last year, for instance, tech companies successfully resisted an
attempt in Brazil to implement such a measure, arguing it would
cost them hundreds of millions of dollars to build new data centers
and upset the structure of the Internet.
Facebook, Google and Twitter have at times bent to censorship
requests from countries including Turkey to remain online, arguing
they must respect the rule of law in countries where they operate.
But the companies have been far less willing to compromise on the
location of their data centers, of which they typically operate
only a handful globally. They say doing so would cost hundreds of
millions of dollars.
"We're not thumbing our nose at law. But saying you respect
local law doesn't mean you always implement it fully if it wouldn't
work with how you deliver your service," one technology executive
said.
To be sure, the Russian regulator says it intends to enforce the
law against small and medium-size domestic and foreign companies
with offices in Russia, and reserved the right to conduct spot
checks on them if necessary. Some foreign companies have said they
will agree to implement the law, including Samsung Electronics Co.,
Uber Technologies Inc. and eBay Inc., representatives for the three
companies said, potentially giving it momentum.
But the regulator says it hasn't recently been in touch with
Apple Inc. about the new law. And one U.S. technology executive
said the companies that had said they were complying operate in
hardware-manufacturing and e-commerce sectors, which often have
accounting and other data already located within countries like
Russia--in contrast to firms like Facebook or Twitter.
In addition, many Russians use home-grown services like
market-leading social network VKontakte, which already have servers
in Russia. That gives regulators more leeway to allow foreign
providers to slide, some observers say. "It would be a lousy PR hit
for Russia to try to take on Facebook, especially when they already
have access to the personal data of online discussions," said Ethan
Zuckerman, director of the Center for Civic Media at Massachusetts
Institute of Technology.
Russia is a dilemma for technology companies. With a large
population but relatively low penetration of Western firms, the
country represents one of Silicon Valley's biggest growth
opportunities. But with a government that has passed new rules
giving it the ability to crack down on online speech, Russia also
highlights the compromises companies must consider in that
expansion, putting principles and profits in conflict.
A law that obliged bloggers to register with the government
caused consternation last year, and Facebook, Twitter and Google
were briefly locked in a conflict with the government over their
refusal to block pages promoting a rally for opposition figure
Alexei Navalny.
Russia's push for a so-called data localization law has been
among the most worrying for technology executives. The executives
argue the new law, passed last year as a privacy initiative, could
serve as a pretext for Russian authorities to demand deeper access
to user data and could give governments more power to control how
the Internet behaves in their territory.
"It's not how our network is built," the U.S. tech executive
said of the Russian law. "And it would set a bad precedent."
Google has been trying to run a fine line between resisting the
new rules without calling attention to itself in a way that could
lead regulators to crack down, or endangering local staff,
according to people familiar with the matter. While the company
said last year it would shutter its engineering operation in
Russia, it maintains sales and marketing staff in the country.
Russian state-controlled telecommunications company OAO
Rostelecom's officials said earlier this year that Google had
started to move some data into Russia in preparation for the law,
but the Russian regulator's spokesman now says it isn't clear
whether Google will comply with the law.
Facebook, which has no office in Russia, told Russian regulators
last week that it won't be ready to comply before Sept. 1, and
added that it has very few data centers and therefore wouldn't
commit to putting one in Russia, according to a person knowledge
with the meeting. The company told Russian officials that it would
be willing to discuss its privacy practices with them to address
any concerns.
As recently as July, Russia had indicated that Twitter--which
has no office in Russia--likely wouldn't be subject to the law
because it didn't collect enough personal data. Now the Russian
regulator says the company may in fact be subject to the law but
that it still doesn't plan an inspection. A person familiar with
the matter said Twitter isn't currently planning to locate a data
center in Russia.
Write to Sam Schechner at sam.schechner@wsj.com and Olga
Razumovskaya at olga.razumovskaya@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
August 31, 2015 14:08 ET (18:08 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
Meta Platforms (NASDAQ:META)
Historical Stock Chart
From Apr 2024 to May 2024
Meta Platforms (NASDAQ:META)
Historical Stock Chart
From May 2023 to May 2024