Russia demands foreign tech companies to set up local offices by 2022

Russian authorities are planning to manage the work of big foreign tech companies, by demanding they set up shop within its borders.

As such, the Russian government decided that a group of foreign companies must open physical branches in the country before the end of 2021, otherwise, they will face sanctions and possible injunctions, according to local reports.

The list includes familiar tech names such as Apple, Google, Meta (Facebook), Telegram, TikTok, and Twitter.

In parallel, Reuters says the country’s telecom regulator Roskomnadzor named 13 foreign companies to open offices so they can comply with a law that took effect on July 1st.

However, if the listed companies fail to comply with Moscow’s new rules, they will face restrictions, which might end up closing their operations permanently. According to local media reports, the restrictions include money transfer restrictions, data, and advertising collection, as well as “outright bans.”

It is worth mentioning that Russia has fined companies who refuse to remove content it dubs as illegal.

Let’s take Apple for example who faces allegations of antitrust in Russia because it has taken measures to promote its technology for products in other countries. Therefore, Russia has imposed a $12.1 million fine on Apple for “abusing” its dominant position in the market by giving preference to its own applications, a government regulator said.

Earlier this year, Russia began requiring domestically produced software to be pre-installed on new smartphones sold within its territory.

In addition, the concern is that Russia might use the law to exercise more control over those companies and their content. For example, the country has debated with Apple several times by imposing a fine for allegedly abusing its App Store dominance.

Last but not least, the Russian decision complicates the business flow more, for the fact that Russia is one of the important tech hubs, which makes it even harder for companies to withdraw from and lose their place.