“The battle for the Internet”: How the Kremlin had subordinated their interests, “Vkontakte” and “Yandex”

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From the expulsion of Pavel Durov to the project “Cheburashka”

 

"Битва за Рунет": Как Кремль подчинял своим интересам "ВКонтакте" и "Яндекс"

 

The publishing house “Alpina publisher” https://www.alpinabook.ru/catalog/PublicismDocumentaryProse/89045/” target=”_blank” rel=”nofollow”>published journalists Andrei Soldatov and Irina Borogan “Battle for the Internet: How the government manipulates information and follow each of us.” In 2015, it was published in English under the title The Red Web: The Struggle Between Russia’s Digital Dictators and the New Online Revolutionaries. The authors tell the story of the Russian Internet and explain how and why it ceased to be free. “The secret” is a fragment of the book devoted to the events of the last two years.

The Kremlin all the time intensified pressure on the global platform, but thought that it was time to use his influence on two of the Russian online social network “Vkontakte”, where politicized users together in a large community and search engine “Yandex”, which with its news service has become the main source of information for millions of Russians. The Kremlin considered this task as a political — popular “Vkontakte” and “Yandex” was not limited to Russia, it has spread to many countries of the former Soviet Union. When in 2014, Russian authorities launched a massive propaganda campaign in the Russian-speaking space, promoting their own version of the Ukrainian events, it has become clear that the need for control over “Vkontakte” and “Yandex” has increased dramatically.

The year began with a scandal in “Vkontakte”. January 24, founder of the social network Pavel Durov sold his share, 12%, Ivan Taurine, General Director of one of the largest Russian telecommunication companies “the Megaphone”. Durov explained the move on his page “Vkontakte”: “what you own sooner or later begins to own you.” (Being a closed person, Durov chose to communicate with the outside world exclusively through their social network). The founder of the network added that as CEO is not going away: “My responsibility is to protect and cherish this network”.

Network “Vkontakte”, is largely copied from Facebook (even the colors were similar, white, and blue), gained initial popularity because it was a place to watch movies and listen to music. In 2012, the network has become the most popular in Russia, with a net annual profit of more than $15 million But she soon found herself at the epicenter of conflict between two major shareholders — oligarchs Igor Sechin and Alisher Usmanov. Sechin was a friend of Putin, Usmanov — the Pro-Kremlin magnate, who has built himself a media Empire from the remnants of the once liberal media: he started with “Newspapers.ru”, then bought “Kommersant”, and then turned his gaze to the Internet, where his prey were LiveJournal and Mail.Ru. Said Usmanov is very interested in “Yandex”.

Durov personally felt the pressure of two oligarchs. Inside the company began an internal investigation concerning his expenses. In the spring of 2014 it became apparent that the battle of the oligarchs does not pass for a 29-year-old Durov gift. He has been acting weird, making steps that no one could understand. 11 March, he posted on the page an article entitled “Seven reasons not to leave Russia” in which he wrote: “In recent months, more and more popular becomes the theme of emigration from Russia. As usual, go against the trend — publish, 7 reasons to stay in Russia”. On the list of most of these reasons like low taxes, talented people, beautiful girls, etc.

April 1, he suddenly announced his resignation as CEO. Two days later he wrote that he changed his mind and remains, and after four days I wrote a new post, which was sorry about the situation inside the company, and has announced that it has filed a lawsuit, hoping to return to the Board of Directors.

"Битва за Рунет": Как Кремль подчинял своим интересам "ВКонтакте" и "Яндекс"

© VKontakte / Telegram News

On 16 April, the tone of his notes has changed dramatically. The first record published at 21:36, said: “on December 13, 2013 FSB demanded from us to give the personal data of organizers of the groups Euromayday. Our response has been and remains a categorical refusal — Russian jurisdiction does not extend to Ukrainian users of “Vkontakte”. The issuance of personal data Ukrainians Russian authorities would not only be a violation of law but also a betrayal of all those millions of people in Ukraine who have trusted us. In the process I had to sacrifice a lot, including my share of “Vkontakte”. But I do not regret anything — protection of personal data of people worth it and much more. Since December 2013 I have no property, but I have something more important — a clean conscience and ideals that I am ready to defend”.

To the post was attached a scanned version of the request of the FSB — the actor did the same as in December 2011 when he refused to cooperate with the security forces during the protests and published a letter of General of the FSB.

Second post two hours later, was to refuse to censor the network: “on March 13, 2014 office of public Prosecutor has demanded from me to close the anti-corruption group Alexei Navalny under threat of blocking of “Vkontakte”. But I have not closed the group in December 2011 and, of course, closed now. Over the past weeks, I was under pressure from different sides. A variety of methods, I managed to win more than a month, but now the time has come to say — neither I nor my team are going to exercise political censorship. We will not delete any of the anti-corruption community Navalny, nor hundreds of other communities, blocking them from us. The freedom to disseminate information is an inalienable right of a postindustrial society”.

21 the first of April, Durov was fired. He himself learned about it from journalists. Commenting on the news, he said that the reason was his public refusal to cooperate with the authorities. The next day, the website TechCrunch, Durov sent an email, which asked about his plans for the future. “I’m leaving Russia and does not intend to return”, — he said. Durov left the country.

With his departure, the company came under the control of Pro-Kremlin oligarch Usmanov: the authorities have repeated the same tactic which was used with traditional media like “Media-the Bridge” Gusinsky in 2000. Only now everything was simpler: there were no journalists demanding a personal meeting with Putin, nor users, are willing to go with the protests on the streets of the capital.

The Kremlin believed that he had received full control over Vkontakte and the company and network — and was not expecting surprises, having missed only one detail: the social network — not the TV station and not a newspaper. If in traditional media the content is generated by reporters working in the newsroom, the social network created by users, scattered around the country and little interested in whoever owns and manages this network.

The oligarch who owns the media, can appoint a new editor-in-chief, and that to intimidate journalists. The owner of the social network are not able to give orders to millions of its users, most of whom don’t even know who he is.

“Actually, for anybody not a secret that the US control the Internet”

April 24, Putin made a surprise public attack on the second largest Russian Internet company. The President spoke at the St. Petersburg media forum, organized by the “popular front” — a populist movement, the urgency created by Putin in 2011 to mobilize regional political forces, while “United Russia”, which consisted mainly of bureaucrats that is rapidly losing the respect of voters. The name and symbols were borrowed from the Soviet era, to improve the attractiveness among middle and older age. But the political goal of the movement was quite modern: resist the liberal-minded Pro-Western intelligentsia of major cities.

The forum’s guests sat in a circular amphitheatre, with the President in the front row, that emphasized the informality and casualness of the meeting. Everything here was their joint loyalty to Putin. In the middle of a conversation Pro-Kremlin blogger Viktor Levanov appealed to the President an unexpectedly long speech about the Internet. The first thing Levanov attacked the USA: “Actually, for anybody not a secret that the United States control the Internet,” and then switched to Google: “Use Google, which collects users personal data. And where does it all go? It all goes to servers in the United States. Accordingly, the question is: why can’t they build servers here? he asked, in full accordance with the General line of the Kremlin. — I don’t want my personal data and information about politicians that run my country went to USA”.

 

Putin replied in his usual manner, referring to Snowden and the NSA, and supported the idea of moving servers to Russia. He stated that the Internet started out “as a special CIA project.”.

However Levanov has not stopped. His next target was not American, and the Russian company “Yandex”, one of the most recognizable Russian brands: “…I cannot understand what it is, that is, on the one hand, we all know that it’s a search engine… but on the other hand, it seems like the media, because constantly, every day, five of the top news “Yandex”, which he collects from other resources, browse the tens of millions of people. “Yandex” while not licensed media and no responsibility before the law as the media is not responsible, it is a search engine, the Internet service. Even foreign media come and register here, in order not to be responsible before the law. “Yandex” does not bear”.

It sounded like a threat. The fact that the meeting with Putin raised the issue of registration of “Yandex” as the media, meant a new direction of attack. First, any media could be closed after two warnings from Roskomnadzor, and secondly, it means that any person may submit to the company a claim for defamation for information published in the selection of news “Yandex”. Up to this point the activities of the company under these rules did not fall.

Putin began to develop the theme. He was clearly ready for the question, stating that immediately after the founding of the company “Yandex” “poddavlivat”, forcing him to take in the governing bodies of Americans and Europeans. “And they were forced to agree to it”, — he said. Putin recalled that part of the company was registered abroad, and then finally voiced what they really thought: “the Founders of this realm, as we know, I already talked about it, the Americans, and they want to retain their monopoly.”

 

His words sounded ominous: the President suggested that one of the most successful Russian Internet companies working under American control. Putin said in the “Crimean” speech about traitors and a “fifth column”, and now made it clear that there is something very wrong in the presence of foreigners in “Yandex”.

The next day the shares of Yandex NV, the Dutch parent company of the Russian search engine, fell 16% on the NASDAQ. Panic began to spread in the air, and began to move in the American portfolio investors, ceased to understand what is happening to the Russian Internet business. “Yandex” has released a statement in which Putin replied that foreign investment is normal practice for a tech startup. “In our case it was purely a financial investment. Now the exchange is about 70% of the shares, but shares traded on the stock exchange, do not give their holders the right to strategic and operational management of the company”. Finally, “Yandex” has reminded the President that Russia is one of the few countries where the leaders — national Internet companies.

But the press release was clearly not enough, and in early may, “Yandex” was included in the Board of Directors German Gref, a close friend of Putin the head of “Sberbank”.

It soon became apparent that the interest of the President to “Yandex”
was not accidental. In may Andrey Lugovoy, the author of the law, allowed to block websites in March Ej.ru, Grani.ru, Kasparov.ru and the blog Navalny, has announced a new initiative to make “Yandex” to register as media. Now this was a direct and immediate threat.

After a week in the office of “Yandex” came the staff of the Investigative Committee. They showed a search warrant, the reason for which was the criminal case against Alexei Navalny: SK blogger accused of embezzlement of funds collected through the service “Yandex.Money” last fall, while Navalny campaigned for the office of mayor. The RAID was for “Yandex” shock.

“Yandex” since the 1990s, was one of the most well-known Russian companies. Its profit came not from the sale of oil or gas are traditional for the country’s exploitation of natural resources, and by building high-tech business. In this sphere Russian engineers successfully competed with their American counterparts: the proportion of “Yandex” on the Russian market was more than Google. Many Russian high-tech companies in the Board of Directors met foreigners — it was a condition of entering the global market and access to foreign investment. Now, the President equated the Directors of foreign agents of foreign influence. <…>

“Volozh is something wrong to say — and to take away from him his business will be easy”

On Serebryanicheskaya embankment of the Yauza stands a huge office building of glass and concrete, with longitudinal orange stripes. His ugly, rectangular forms, it resembles a slightly updated architecture of the 1970s, and cannot be anything else except a business center. It was here, in Silver-City, 10 June 2014, Putin decided to meet with the leaders of the Russian Internet — the first time in fifteen years that have passed since December 1999.

During these fifteen years, much has changed. Then Internet entrepreneurs could still speak with Putin openly.

For 15 years, the Runet has become a serious industry that gave 8.5% of GDP. By the middle of 2014 it worked with 1.3 million professionals. Russian companies dominated the local market even after the advent of the global corporations. But the Kremlin control over the Internet during this time have changed too much — by the summer of 2014 in the country for two years acted tough Internet censorship.

The meeting with Putin was to be held in the framework of the forum “Internet entrepreneurship”, and before the arrival of the President of the businessmen invited to discuss the future of the Internet. The discussion lasted two and a half hours, but during that time the heads of major Internet companies have talked about anything but that in the future the Internet in its present form will simply die. Frank conversation was not: no one had jumped up and spoken about the lack of freedom of speech on the Internet, the question of state control over the Network was not raised. The speakers never mentioned the President’s name, although it was he who set the rules.

Among sitting on the stage was Arkady Volozh, founder of Yandex, which took a pencil from the first meeting with Putin 15 years ago. He knew that the time for jokes is over — the company was under serious pressure.

On the stage stood a chair with the inscription “Vkontakte”. It was not Pavel Durov, a chubby man with glasses, whose name was Boris Dobrodeyev, and he represented the Pro-Kremlin media establishment: his father was the head of state holding VGTRK. In January he was appointed first Deputy General Director of “Vkontakte”.

Internet entrepreneurs knew that the fate of Durov can be repeated. Blogger Leviev, who invented the “Big red button” Alexei Navalny, was also at this meeting, his company was broadcast. Seeing dobrodeeva, he immediately thought about Volozh. “The whole business of “Yandex”, his whole circulatory system is in Russia, — he will tell us later. — All data centers, offices, staff. Yes, there are branches abroad, but they are only a drop in the sea. Volozh is something wrong to say — and to take away from him his business will be easy”.

Putin, as always, was late. When he arrived, he paused at a small exposition dedicated to Internet start-UPS. The President met Kirill Varlamov, the embodiment of Putin’s ideas about the ideal Internet entrepreneur, loyal to the Kremlin. Engineer with “Uralmash”, he was in the early 2000s, opened a small company for software development and soon moved to Moscow. In 2011 he became interested in the people close to Putin, “the Agency for strategic initiatives”. In December 2011 he entered the campaign headquarters of Putin and became his confidant. Varlamov also gave one of the key positions in “the popular front”. Putin has not forgotten about it after the elections — Varlamov led the development Fund of Internet initiatives, which was to distribute Internet startups with government money.

"Битва за Рунет": Как Кремль подчинял своим интересам "ВКонтакте" и "Яндекс"

Vladimir Putin and General Director of “Yandex” Arkady Volozh (on the right) during the forum “Internet entrepreneurship in Russia”

© Alexei Druzhinin / TASS

In the 1990s, appeared in Russia a whole generation of brilliant Internet entrepreneurs, but Putin was not interested in that. The loyalty he prized above talent. He needed a private Internet-entrepreneurs, selected Varlamov. This was the main message of the June meeting. Putin entrusted the Fund Varlamov to arrange a meeting, and when the President finally appeared in the hall and took the stage, Varlamov sat on his right hand. To the left of the President sat Volozh. The whole meeting he was extremely careful, only repeating once you have chosen a thesis: there are not many countries where local Internet companies dominate global.

On the contrary, in the first row in the hall, sat Vyacheslav Volodin, first Deputy head of the presidential Administration, who oversaw the Internet.
The only one who decided to speak about regulation, was 35-year-old Dmitry Grishin from Mail.Ru. An engineer by training, Grishin was very nervous, referring to Putin. First, he reminded that the Internet in Russia developed in an open environment. “And we have formed during this time some mentality of competition, openness, he said. — We rely on ourselves.” Apologetically Grishin added that the Internet business during this time accustomed to the fact that any contact with the government in General, nor to no good results: “In principle, if it is possible to hide, did not notice, it is better to try to do it.”

“First, we still will not hide, immediately interrupted him Putin under the approving laughter in a hall. — It is necessary to get out from under snags and communicate. No matter how frustrating, still need society and government to communicate and seek common solutions”.

Grishin turned red. “We often hear in the corridors that all Internet users — “frostbitten” and people from another planet, excitedly he continued. — Actually it is not that we are not “crazies”, we actually love our country, we want it to be comfortable to live and work. And we understand that the Internet has become, in principle, the biggest he has grown, and that it is now an integral part of the whole society. Therefore, in principle, regulation is necessary. And if you look, very often the ideas contained in the regulation, they are very correct. But unfortunately, sometimes it happens that the implementation is, in General, scares. And we would like to develop, maybe some system process that allows us not only to listen but to hear… It would be very, very important!”

The timid tone perfectly showed how the mutated relationship of Putin and the Internet community. Entrepreneurs are not trying to challenge the Kremlin. Many of those present worried about is that speech can go about “Cheburashka” — the project of Autonomous Internet, proposed on the eve of one of the senators. To everyone’s relief, the case before it never came.

The main beneficiary of the June 10 meeting became the popular front and Kirill Varlamov. The leaders of the Russian Internet was only invited in order to give legitimacy to a new presidential toy project for government funding of Internet startups. And they did it.

Under pressure from the Kremlin “Yandex” has started to retreat. 12 Sep 2014 the company agreed to register three of its services — cloud storage “Yandex.Disc” social network “My circle” and e-mail system as “organizers of information distribution”. All of them were in the registry of Roscomnadzor as services that require six months to store data about users and to provide security services remote access. In the same list was Mail.Ru and “Vkontakte”.

Opportunities SORM has increased again.

Book provided by the publisher https://www.alpinabook.ru/” target=”_blank” rel=”nofollow”>”al’pina pablisher”

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