13 April 2017
Russia: Roskomandzor’s Decision to Restrict Access to Zello a “Warning Sign” for Companies | commentary by Pavel Sadovsky and Maria Demina, DataGuidance

The Federal Service for the Supervision of Communications, Information Technology and Mass Communications (‘Roskomnadzor’) announced, on 10 April 2017, that pursuant to its decision of 6 April 2017 No. 8 (‘the Decision’), it had ordered telecommunications operators to restrict access to Zello Inc.’s services within Russia after the company failed to inform the Roskomnadzor of the storage on its servers of all electronic messages sent using Zello’s website and apps. According to Federal Law of 27 July 2006 No. 149-FZ on Information, Information Technologies and Protection of Information, as amended (‘the Law’), ‘information distributors’ are obliged to notify the Roskomnadzor of their compliance with localisation and retention obligations under the Law.

Vladislav Arkhipov, Of Counsel at Dentons, told DataGuidance, “[The Decision] is a warning sign that [Russian legislation] will be applied more consistently to foreign internet communications services [by] the Russian authorities, relying on the jurisdictional test that any service targeting Russian users and audiences as customers shall be subject to Russian law. Indeed, one foreign messaging service, namely, Threema, has already registered with the Roskomnadzor. Other communications services may be faced with the choice to localise their data in Russia or face their services being blocked. In part, this depends on their business strategy, the importance [they give to] the Russian jurisdiction for their business operations, and [their] general acceptance of the Roskomnadzor’s jurisdictional test.”

Zello, which operates an app allowing users to communicate via private unencrypted channels, falls under the definition of information distributor under Article 10.1 of the Law and, as such, is required to notify the Roskomnadzor of their compliance with the Law at the start of their activities in Russia. On 15 March 2017, the Roskomnadzor gave Zello a 15-day period to do so. After Zello’s continued failure to respond to this request, the Roskomnadzor issued the Decision.

Pavel Sadovsky and Maria Demina, Head of IP/TMT and Associate respectively at EPAM, outlined, “Information distributors must notify the Roskomnadzor at the Roskomnadzor’s request (within five business days from the date of the receipt of such a request) or at their own discretion. The Roskomnadzor maintains a register of information distributors on its websites. However, currently, not many information distributors have notified the Roskomnadzor of their activities. The definition of an information distributor is very broad and most of the companies refrain from notifying the Roskomnadzor at their own discretion.”

Failure to notify the respective state authorities [of the start of their activity as information distributors] can entail a penalty of up to RUB 300,000 (approx. €4,050).

Their qualification as an information distributor also imposes additional obligations on such companies, related to data retention and localisation, under the amended version of the Law. Additionally, the Roskomnadzor previously clarified that these obligations apply regardless of whether an information distributor has received a request from the Roskomandzor to register.

Natalia Gulyaeva and Maria Sedykh, Partner and Associate respectively at Hogan Lovells, clarified, “[Under Article 10.1 of the Law], information distributors are obliged to comply with requirements for [adequate security of information systems including their] equipment and software, and store in Russian territory logs and metadata related to the receipt, transmission, delivery and/or processing of their internet users’ voice data, text messages, pictures, sounds or other messages within six months. A violation of the requirements to store the information [can entail a fine] of up to RUB 1,000,000 (approx. €13,500), and the failure to notify the respective authorities can entail a penalty of up to RUB 300,000 (approx. €4,050).”

In the Decision, the Roskomnadzor outlined that the access to websites and apps operated by Zello, which has over 400,000 users in Russia, would be restricted until the notification to the Roskomnadzor is made. Vadim Ampelonsky, Press Secretary of the Roskomnadzor, commented that, in addition to Zello and Threema, inspections of other information distributors operating in Russia have also been carried out.

Konstantin Bochkarev and Paulina Smykouskaya, Head of IP and Technology in Russia and the CIS and Associate at PwC Legal Russia respectively, concluded, “The Decision is the first case when an app has been blocked in Russia on such grounds. However, whilst the notification is not a burdensome procedure and the form contains seven questions and can be filed online, the other obligations imposed on information distributors, related to data retention and localisation, are a source of major concern for online communications platforms and messengers. Additionally, starting from July 2018, information distributors will be required to retain the content of all communications for six months [under the Federal Law of 7 July 2016 No. 374-FZ on Amendments to the Federal Law on Counteracting Terrorism].”

Kaven Lahooti, 13 April 2017, DataGuidance.

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