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

As you know, some Western Internet companies, including Facebook, are not in a hurry to transfer their servers to Russia and to comply with the requirements of Russian legislation on the localization of personal data. Messengers like Telegram and search engines like Google also do not always follow the orders of Russian courts. To encourage them to do this, the Russian authorities want to increase the size of fines. This information in an exclusive order today was reported by Reuters, referring to "three sources, among which are employees of Russian and foreign Internet companies, as well as a source in the industry association." All of them received from the presidential administration of the Russian Federation a copy of the document with the draft legislative amendments.

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. In accordance with the document, the maximum fines for Google, Facebook, Telegram and other "non-obedient" will be 1% of annual revenue in Russia or 1.5 million rubles. (depending on which amount is greater). 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 source, the presidential administration and Roskomnadzor are working on the development of legislative amendments. In November, members of the presidential administration sent the project to representatives of several Russian and foreign Internet companies in order to receive feedback on the proposed changes.

The draft law provides for amendments to the Code of Administrative Offenses of Russia.
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Reuters believes that for technology companies, fines will become a significant motivator. For example, the Russian LLC Google on the results of 2017 reported revenue of 45.2 billion rubles. Thus, the fine for it may amount to 452 million rubles.

The main requirement of the authorities to Google and Facebook is the transfer to Russia of servers that store personal data of Russians. Accordingly, these servers will comply with the norms of the “Law of Spring” with mandatory storage of traffic, provision of encryption keys to the FSB and connection to the SORM system, as required by Russian legislation.

In addition to transferring servers in Russia, many foreign companies do not comply with the requirements of other laws. For example, Roskomnadzor previously complained that Google does not remove links to resources prohibited in Russia from the search engine and does not connect to the federal state information system. On Monday, November 26, 2018, the Roskomnadzor management in the Central Federal District opened an administrative case against Google, LLC. Roskomnadzor notes that the lack of connection to FGIS "forms the composition of an administrative offense provided for by part 1 of article 13.40 of the Code on Administrative Offenses of the Russian Federation. For legal entities provides for liability - a fine in the amount of from 500 to 700 thousand rubles. " Regarding Google LLC, a protocol has been drawn up. Consideration of the case on the merits will be held in December 2018.

According to the new bill, the increase in the size of 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 blocking of prohibited sites (Tor, VPN and proxy services);
• organizers of information dissemination (Telegram, WeChat, Habrahabr);
• online cinemas;
• any other companies that collect personal data of Russians and are obliged to store them in the territory of the Russian Federation.

They will be able to charge a fine several times, while the authorities will still have the right to block companies' Internet services in the event of repeated violations of the law.

In a commentary for Reuters, a representative of foreign Internet companies admitted that the indicated amounts for them are already impressive, but the question of law enforcement 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 the Russian audience and advertisers without forming a legal entity, unless the authorities go to impose sanctions on customers who buy advertising on "hostile" resources.

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