Kremlin push to increase control over the internet

The Russian authorities are investing significant sums in order to extend state control over the internet, according to a media investigation published last week. At the same time, there are big changes underway at VK, the company that controls Russia’s biggest social network (Vkontakte). According to The Bell’s sources, the head of VK, Vladimir Kiriyenko (the son of an influential Kremlin official) wants to make VK the country’s most powerful media company.

• A joint investigation published last week by independent media outlets iStories (designated a ‘foreign agent’ by the Russian authorities) and Agenstvo revealed much about the Kremlin’s vision for extending control over the internet. Journalists found that there are plans to make RuTube, a video service of declining popularity controlled by state-owned Gazprom Media, into a Russia replacement for YouTube, while the little-known service Yappy is supposed to be a TikTok replacement.
• Both of the new platforms are planning to offer serious money to lure in high-profile users, according to the investigation. Successful TikTokers were offered up to 125,000 rubles ($1,700) a month — more than twice the average salary in Russia — for good content. And prominent YouTubers could earn three times the amount they get on the Western platform. However, bloggers are reluctant to risk advertising revenues and prospects in return for dubious state sponsorship.
• Rutube was launched 15 years ago, but all attempts to make it a real rival to YouTube have been failures. The officials interviewed as part of the investigation are also skeptical of Rutube’s prospects — instead, they are banking on YouTube caving into the demands from the Russian authorities (such as deleting opposition content). One official was reported as saying that economic measures could be taken against U.S. media companies: for example, prohibiting Russian businesses from buying advertisements, or slowing down their operations in Russia.
• At the same time, there are major changes underway at Russia’s second biggest internet holding, VK, which last year re-branded itself and discarded its previous name of Mail.Ru Group. This week, VK head Vladimir Kiriyenko began a company reshuffle that seems to be designed to meet a series of political goals.
• Several senior managers who worked under the previous owner, billionaire Alisher Usmanov, have left in recent weeks. In their place, Kiriyenko is appointing people who worked with him at state-owned telecommunications giant Rostelekom, where he was boss before moving to VK. The only member of the old VK team to be promoted was Stepan Kovalchuk (VK is owned by gas giant Gazprom and insurance company Sogaz, which is controlled by the family of Yuri Kovalchuk, a powerful billionaire with close ties to Russian President Vladimir Putin). Stepan’s father (and Yuri Kovalchuk’s nephew), Kirill Kovalchuk, heads the family-owned National Media Group, which controls several leading TV channels. In his position as vice-president at VK, Stepan Kovalchuk is responsible for social media content — particularly video.
• When VK was sold last year, a source told The Bell that the state was unhappy at the declining audience share of Vkontakte, a Russian-created social media network akin to Facebook. Usmanov had been reluctant to invest money in Vkontakte, preferring instead to spend on other promising assets held by VK such as taxi services and food delivery. Now, Kiriyenko's task is to rebuild Vkontakte’s audience and increase the network’s influence, several market sources told The Bell. “He wants to build a media holding on the basis of VK,” said one source.

Why the world should care: The Kremlin is trying to make much of the Russian internet into something equivalent to state-owned TV propaganda. This approach has already enjoyed some success, which was illustrated in a recent survey by pollster Levada Center (designated a ‘foreign agent’ by the Russian authorities) about the Ukraine crisis— over 50 percent of respondents blamed the U.S. for the current situation, and less than 5 percent pointed the finger at the Kremlin.