The new law forces big tech companies to open offices in Russia

On 1 July 2021, Federal Law No. 236-FZ* “On the Activities of Foreign Entities in the Information and Telecommunications Network “Internet” in the Russian Federation” (the “Law”) came into force.

Now, foreign companies operating in Russia using only the Internet must comply with several new rules. 

The law follows the general trend of localization of online business and the adoption of measures against large foreign IT companies for non-compliance with requirements to remove prohibited information and localize data of Russian users.

What does the new law regulate?

The scope of the law applies to companies that run websites, pages of websites, or computer programs accessible by more than 500,000 Internet users residing on the territory of the Russian Federation in 24 hours.

In addition to a half-million audience, other conditions must be met from those listed below for a company to be affected by the new law:

• information on the internet resource is presented in Russian or the state language of the republics or peoples of Russia;
• the resource disseminates advertising aimed at Russian consumers;
• a foreign entity processes information about Russian users; or
• a foreign entity receives funds from Russian individuals or companies

If a foreign organization is neither the owner of an information resource nor the owner of the software, this does not mean that it cannot fall under the law considered. The following organizations also fall under the requirements and norms of the new legislative act:

• Hosting providers or persons providing placement of an information resource on the network, if users of such resource are located, including in the territory of the Russian Federation;
• Companies whose activities are related to ensuring the functioning of information systems or computer programs that are used on the Internet to receive messages from Russian citizens or to distribute advertising aimed at the Russian audience.

A list of foreign companies subject to the requirements of the Law will be published on Roskomnadzor’s website. 

How to comply with legal requirements?

The federal law also proposes some changes that foreign companies need to go through to operate in the territory of the Russian Federation:

1. The most basic thing is to create a branch, open a representative office or register a legal entity on the territory of the Russian Federation.
2. Post a special online form for Russian citizens to apply (the form will be additionally presented in the legislative act after coordination with Roskomnadzor).
3. Register a personal account on Roskomnadzor's website and use it to interact with Russian state services.
4. Install one of the programs recommended by Roskomnadzor for tracking the number of users of the resource.

Sanctions

The law introduces liability for failure to comply with the new norms and requirements. In the case of non-compliance, the following measures may be imposed:

• Informing users that a foreign company violates the requirements of Russian law 
• Banning the distribution of advertising to the Russian audience on the information resource of a foreign company and, in general, advertising about this company on other resources
• Restrict money transfers from Russian individuals and legal entities

If the violations are not eliminated, Roskomnadzor will have the right to restrict access to the information resources of a foreign company or to ban search results.

Currently, it is difficult to predict how these measures will be implemented in practice and which companies Roskomnadzor will include in the list. Nevertheless, even now foreign owners of Internet resources with a Russian audience should conduct an audit of their activities aimed at the Russian market and evaluate the measures needed to ensure compliance with the Law.