Reuters: Russia will increase fines for Internet companies to 1% of annual revenue

    As you know, some Western Internet companies, including Facebook, are in no hurry to transfer their servers to Russia and comply with the requirements of Russian legislation on the localization of personal data. Messengers like Telegram and search engines like Google do not always comply with Russian court orders. To encourage them to do this, the Russian authorities want to increase fines. This information was exclusively reported by Reuters today, citing "three sources, among which are employees of Russian and foreign Internet companies, as well as a source in an industry association." All of them received from the presidential administration a copy of the document with the draft amendments to the legislation.

    Obviously, the threat of blocking does not bother violators or they do not perceive it as real, so the authorities decided to hit the ruble. According to the document, the maximum fines for Google, Facebook, Telegram and other “disobedience” will amount to 1% of annual revenue in Russia or 1.5 million rubles. (depending on which amount is larger). The first option is more dangerous for Google and Facebook, and the second option is for Telegram and other small companies that do not have revenue in Russia.

    According to one of the sources, the presidential administration and Roskomnadzor are working on the development of amendments to the legislation. In November, presidential administration officials sent the project to representatives of several Russian and foreign Internet companies in order to receive feedback on the proposed changes.

    The bill provides for amendments to the Code of Administrative Offenses of Russia.

    Reuters believes fines will be a significant motivator for technology companies. For example, the Russian company Google on the basis of 2017 reported a revenue of 45.2 billion rubles. Thus, the fine for her may amount to 452 million rubles.

    The main requirement of the authorities for Google and Facebook is the transfer to Russia of servers on which personal data of Russians are stored. Accordingly, the rules of the “Spring Law” will be implemented on these servers with the mandatory storage of traffic, the provision of encryption keys to the FSB and connection to the SORM system, as required by Russian law.

    In addition to moving servers to Russia, many foreign companies do not comply with other laws. For example, Roskomnadzor previously complained that Google does not remove links to resources prohibited in Russia from the search system and does not connect to the federal state information system. On Monday, November 26, 2018, the Central Federal District Department of Roskomnadzor opened an administrative case against Google, LLC. Roskomnadzor notes that the lack of connection to the FSIS “constitutes an administrative offense provided for in paragraph 1 of Article 13.40 of the Code of Administrative Offenses. For legal entities, liability is foreseen - a fine in the amount of 500 to 700 thousand rubles. ” A report has been drawn up against Google LLC. The merits will take place in December 2018.

    According to the new bill, the increase in fines will affect not only Google and Facebook, but a large list of companies, among them:

    • search engines (Google, Yandex);
    • news aggregators (Yandex.News, Google News);
    • means of bypassing the blocking of prohibited sites (Tor, VPN and proxy services);
    • information dissemination organizers (Telegram, WeChat, Habrahabr);
    • online cinemas;
    • any other companies that collect personal data of Russians and are required to store them on the territory of the Russian Federation.

    They will be able to charge a fine more than once, while the authorities will still have the right to block the Internet services of companies in case of repeated violations of the law.

    In a commentary to Reuters, a representative of foreign Internet companies admitted that the indicated amounts are already impressive for them, but the question of legal applicability arises: “Yes, for foreign companies this is already a substantial amount, but it is not clear how it will be calculated and charged. Many foreign companies do not have a legal entity in Russia, while others have only a representative office that performs only marketing functions, and therefore its revenue is minimal. How much the company really earns in Russia, only she knows. ”

    Theoretically, even Facebook and Google can work with Russian audiences and advertisers without forming a legal entity, unless the authorities agree to impose sanctions on customers who buy ads on "hostile" resources.

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