Tech giants beware

Russian lawmakers seek significantly harsher fines for Internet companies that fail to comply with censorship orders

The Russian State Duma’s state-building and legislationcommittee has approved amendments to a draft law on fines for Internet companies that fail to comply with orders from Russia’s federal censorship agency, Roskomnadzor, Interfax reports. In particular, tech companies that do not restrict access to and/or remove content banned in Russia could face fines tied to their annual revenue. For major companies, this could mean penalties in excess of millions or even billions of dollars. The lawmakers behind the proposal underscored that foreign companies like YouTube, Facebook, and Twitter are usually the ones responsible for these types of violations.

In the approved amendments to the draft law, Russian lawmakers have proposed making repeated violations committed by hosting providers punishable by maximum fines ranging from 5 to 10 percent of the company’s revenue, with a minimum penalty of four million rubles (about $54,500). In its original form, the bill contained no mention of penalties tied to company revenue: it simply outlined fines for legal entities ranging from four to eight million rubles (about $54,500 to $109,000).

The authors of the amendments suggested tying fines for website providers and owners who fail to remove information banned in Russia to income level, as well. In such cases, the maximum fine for legal entities would range from 10 to 20 percent of their revenue for the year, with a minimum penalty of eight million rubles ($109,000). In its original form, the bill outlined fines for legal entities ranging from 8 to 15 million rubles (about $109,000 to $204,000).

According to the authors of the bill, foreign companies — including Internet giants like YouTube, Facebook, and Twitter — violate Russia’s legal requirements more often than others. According to Roskomnadzor, as of April 2020, YouTube had failed to remove 10,482 pages containing banned content, Twitter had failed to remove 1,462 pages, Instagram — 1,435, and Facebook — 362.

Who will be responsible for paying the fines — the company’s head office or its representative offices in Russia — remains unclear. For example, YouTube’s parent company, Google, has its own Russian LLC. According to open data, this company’s revenue amounted to 74.9 billion rubles (about $1.02 billion) in 2019. In this case, it could face a maximum fine of nearly 15 billion rubles ($204 million). But if lawmakers were planning to impose penalties on the company’s head office, Google could face fines in excess of $32 billion.

Previously, Russian courts have repeatedly fined the American company Google LLC for refusing to filter content banned in Russia — the penalties imposed on the company thus far have ranged from 700,000 to three million rubles (about $9,525 to $40,830).

Facebook and Twitter do not have representative offices in Russia. In 2019, Facebook’s revenue was $70.7 billion (the amount it earned in Russia remains unknown), so presumably it could face a maximum fine of more than $14 billion. Twitter’s income last year was $3.46 billion, which means it could face a maximum penalty of around $700 million.

Text by Alexander Baklanov

Translation by Eilish Hart