Virtual World Bringing Real Money and Challenges to Russia

The achievements of the information technology and telecommunications sector in 2013 highlight the paradox of the government's efforts to wean the economy from its reliance on natural resources while maximizing control of how the virtual world functions.

The turnover of "Internet dependent markets" — an ecosystem that includes Internet service providers, investments in Internet companies and electronic commerce, reached 4.3 trillion rubles ($131 billion) in 2013, equivalent to 6.9 percent of the country's gross domestic product last year.

"Research and practical experience indicate that the Russian Internet has become a promising platform for building successful businesses," said Sergei Plugotarenko, president of the Russian Association for Electronic Communications, during a forum in Moscow summing up the country's Internet achievements last week.

Meanwhile, the government continues to increase its scrutiny of how the web is used and managed, both at home and abroad. The parliament reviewed 35 pieces of legislation related to the Internet in 2013, compared to 31 last year. Last week, Foreign Minister Sergei Lavrov followed up on efforts by Russia this summer to increase sovereign control of the web, when he reaffirmed the state's determination to push the United Nations to create an international organization to control the Internet, Interfax reported.

Virtual Evolution

Some government officials are already contemplating how the sector will evolve.

Deputy Communications and Mass Media Minister Alexei Volin said  Internet development is inseparable from economic development and now is the time to think about the next segments of the economy that will become dependent on the Internet 3 to 5 years down the road.

Education and health services are the most likely new candidates to benefit from Internet technologies and digitalization in the next few years, Volin said.

Last month, Prime Minister Dmitry Medvedev signed the 2014 to 2020 information technology development strategy identifying "the development of information technologies as one of the most important factors" to fulfill President Vladimir Putin's post-election orders to increase worker productivity by 1.5 times by 2018, help five Russian universities to enter the top 100 in the world by 2020 and raise salary levels 50 percent by 2018.

The strategy's goal is to decrease the economy's dependence on natural resource export by increasing export of information technology products and services to $11 billion by 2020, up from this year's $4 billion.

Keeping Control

Although officials at the forum recognized the resilience of the Internet dependent economy to effects of a global and domestic slowdown, parliamentarians have been busy passing amendments and creating new laws to gain more control of the sector.

Last week, human rights activists and members of the political opposition expressed their concerns about the State Duma passing the first reading of a bill allowing prosecutors to block websites containing illegal information, including invitations to public protests and "extremist" activity, without getting a court order.

In July this year, President Vladimir Putin signed an anti-piracy law allowing courts to order the blocking or deletion of web pages containing pirated video content based on a request by copyright holders. This would be done using an IP blocking mechanism that could inhibit  legitimate content residing on the same servers.

Ruslan Gattarov, a member of the Federation Council's information policy committee, said at last week's forum that the Communications and Press Ministry has moved from a phase of "hopping from one issue to another to a systematic problem-solving approach." This resulted in laws and regulations that, he said, are welcomed by the industry.

"It obvious that the government is keen to sort out the legal framework because of the growing social and political importance of information technology," a statement from the Russian Association for Electronic Communications said.

"We hope that the country's authorities … in the near future are able to realize the necessity to change the model of Internet management from vertical to horizontal, and start to regularly and actively involve experts from the Internet industry, scientists and community representatives in developing legal initiatives," the statement said.