Russia cracks down on foreign hosting providers

Russia cracks down on foreign hosting providers
The Russian authorities have started to block access to foreign hosting providers and cloud service companies / bne IntelliNews
By Vladimir Kozlov in Cyprus April 18, 2024

Russian authorities have cracked down on foreign hosting providers and cloud service companies, blocking access to their websites.

Under a recently tightened regulation, commonly referred to as "the landing law," foreign internet companies with a daily Russian audience of over 500,000 users are supposed to open a Russian office and a representation account on the web site of Russian telecom watchdog Roskomnadzor.

Failure to do so can lead to punishments, and the Russian regulator Roskomnadzor has blocked the websites of cloud platform Amazon Web Services and domain name registrar and hosting company GoDaddy.

Access to these websites were blocked because the companies failed to comply with the requirements of "the landing" law, the telecom watchdog said. The blockages came into force immediately, as of mid-April.

Roskomnadzor also warned two more companies, Hetzner Online GmbH, a German web hosting company and one of the largest data centre operators in Europe, and the US-based web hosting provider FastComet, that they are also required to comply with "the landing law." Earlier, Roskomnadzor blocked access to eight more foreign web hosting providers under the same pretext of failing to comply with "the landing law." These include cloud service provider Kamatera, WordPress-focused hosting company WPEngine, domain registrar Network Solutions, cloud and hosting firm Ionos and cloud computing service DigitalOcean, as well as hosting providers DreamHost, and Bluehost.

Tightening regulations

As of December 2023, "the landing law," which had been around for a few years, was dramatically tightened, with a special focus on global web hosting and cloud storage providers.

Apart from the requirement of opening a Russian office and a representation account, including a form for feedback on Rosokomnadzor's website, foreign hosting and cloud service providers are now obliged to enter a special register of the Federal Tax Service, as well as to identify their clients by means of payment, phone number or documents.

Many of the companies affected by the tightening of the regulation have already restricted their activities in the country in the wake of Russia's invasion of Ukraine in February 2022. However, they still maintain relations with existing clients and therefore haven't completely exited from the Russian market.

As an alternative to blocking access to a company's website, Roskomnadzor could potentially ban payments to foreign hosting providers from Russian customers, but such a restriction would only apply to Russian banks, while foreign hosting providers mostly don't have Russian bank accounts.

Meanwhile, to fully comply with "the landing law," a foreign hosting or cloud service provider with a daily Russian audience of over 500,000 also needs to have a Russian-language version of their web site, advertise among Russian residents or accept payments from them.

Long-established practice

Russian authorities first applied "the landing law" back in 2022 when the telecom watchdog used it to force the local web search engine Yandex to mark Wikipedia, TikTok, Twitch, Zoom and other foreign tech giants as violators of the law, as well as to ban advertising of Google services.

Since then, Google has been able to advertise the services of all its divisions in Russia, including Google Search, Google Play, Google Chat, YouTube, YouTube Music and Gmail.

Google's Russian revenue is not that significant, and the move didn't deal a major blow to the US tech giant, but it still had to take steps to comply with the ad bans.

Russia has been gradually introducing restrictions on foreign IT companies for quite a while now, reflecting souring relations between Russia in the West, as well as the Russian government's policy of replacing foreign IT solutions with local equivalents – allegedly, out of security concerns.

Back in 2016, Russia enacted the law on personal data storage, which required that Western IT companies store personal data of Russian citizens within Russia.

After a long back and forth and some rather insignificant fines slapped on foreign IT giants operating in Russia, most of them complied with the law, including Apple, Microsoft, Samsung, PayPal, and LG.

However, some refused to comply. Arguably, the best known example is the business and employment-focused social media platform LinkedIn, which was blocked by a Russian court following a complaint filed by Roskomnadzor.

Major companies affected

The recent wave of blockages has affected major global players in their respective fields.

Amazon Web Services, a subsidiary of Amazon, is one of the top providers of on-demand cloud computing platforms and APIs to individuals, companies and government organisations.

The top three most popular hosting service providers are Amazon, Newfold Digital and Shopify, while GoDaddy Group, which ranks fifth among global hosting providers, is the world's largest domain name registrar. According to Domain Name Stat, 80.3mn domains (which corresponds to 11.85% of the total) are registered through GoDaddy.

The blockage of their websites in Russia might force the affected companies to scale down their local operations even further or totally exit from the Russian market.

Amazon Web Services and Bluehost stopped registering new clients from Russia in March 2022, but the company still supports clients with whom it previously had contracts.

GoDaddy has stopped selling domain names in the .ru and zones, but is still supporting existing clients. Meanwhile, Ionos has announced a complete stop of cooperation with Russian clients and vendors.

Network Solutions said that Newfold Digital continues to work with clients, but due to payment system restrictions, it cannot accept payments from banks located in Russia.

Experts say that Roskomnadzor's recent move could prompt Russian customers of foreign hosting and cloud service providers to switch to domestic alternatives.

It will be safer for corporate clients to switch to other hosting providers, Ekaterina Abashina, a lawyer at DBA & Partners, a Moscow-based law firm, was quoted as saying by Russian business daily Kommersant.

However, a scenario under which Russian authorities will immediately block all local websites hosted by foreign providers is unlikely.

"It is unlikely that Roskomnadzor will dare to block all IP-addresses belonging to the hosting services it has blocked," Sarkis Darbinyan, a managing partner of the DRC law firm told Kommersant. "If it does so, one half of the Russian Internet will stop working."