Foreign Tech Platforms' "Onshoring" Legislature

Impact on Multinational Technology Companies In Russia

 

On June 17, the State Duma adopted in the final third reading the legislation introducing "local presence" requirements for foreign tech companies operating in Russia without local representative offices. The respective draft law was submitted to the State Duma on May 21 by a group of MPs and senators, acting under the guidance of the Presidential Administration.

The new law is part of the policy trend of tightening the rules of the game for global technology companies in Russia on the eve of parliamentary elections in September 2021.

The legislation is largely inspired by the Turkish social media law adopted in 2020 and other recent international practices tightening online platform regulation (including the proposed EU Digital Services and Digital Markets Acts, the TikTok case in the US, recent social media legislation in India and elsewhere).

International practice is widely referred to by the sponsors of the bill in the State Duma and the regulators, providing cover for political reasons behind the initiative.

The law imposes on global tech companies requirements to set up both a physical presence in Russia (the establishment of a branch office or local legal entity) and "digital residency" (via an online cabinet in a system to be managed by Roskomnadzor/RKN).

The law is potentially applicable to a broad range of multinational companies providing digital services in Russia, but its main targets are clearly social media, video-sharing, messenger and other user-generated content (USG) platforms - specifically those able to have an impact on domestic political activities.

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