Google is to close its engineering office in Russia in the wake of growing restrictions on internet freedoms, including a law that comes into effect next year targeting foreign web companies.

The law, which authorities say will improve data protection, requires foreign firms to store Russian users’ personal data on servers located in Russia. Critics say it is designed to make it harder for US internet companies to operate in the country and will give Russia’s secret services – which are reportedly able to monitor virtually all data transmitted by domestic internet service providers – greater access to information held by foreign firms.

A Google Russia spokeswoman declined to comment on why it was closing its engineering office. “We are deeply committed to our Russian users and customers and we have a dedicated team in Russia working to support them,” the company said. It will retain support and marketing staff in the country.

President Vladimir Putin is no fan of the internet, calling it a CIA project, and saying he prefers to get his information from other sources. Russian security services have reportedly advised officials against using Gmail, and legislation was considered recently that would prohibit government employees from discussing official information over non-state email accounts.

Another law, passed this year, requires bloggers with more than 3,000 followers to register their personal information with the government, a regulation that has been decried as an intimidation tactic. Whereas state-controlled television offers generally pro-Kremlin views, dissent has been able to flourish on social media and blogs, which played a key role in the opposition protests that swept Moscow in 2011-13.

Google has criticised state restrictions on the internet in the past. Last year, Eric Schmidt, the executive chairman, said he was worried that Russia was beginning to copy China in internet censorship. Google closed its internet search service in China in 2010 after it stopped cooperating with government censors.

Anton Nossik, a web entrepreneur often called the father of the Russian internet, who now runs the internet marketing startup Fuzzy Cheese, said that besides the law requiring Russia-based servers, growing anti-western rhetoric following the Ukraine crisis posed a threat to foreign companies such as Google.

“The changes in the political situation make it less viable, less feasible to maintain engineers here, and that is not even counterbalanced by the fact that engineers get cheaper by the day because of the [falling value of the] rouble,” Nossik said. “There are a lot of counterproductive measures, not only [government] pressure but also the general unpredictability of how the situation will develop. One thing that is predictable is that it will develop for the worse. The only thing we don’t know is how fast regulations limiting foreign activities on the Russian market will be adopted.”

In September, Adobe Systems shut down its Russian office. The Vedomosti newspaper reported that the US firm was unable to meet the requirements of the new law and had been unable to close several deals because of western sanctions against Russia.

In April, Pavel Durvo, the founder of Russia’s most popular social network Vkontakte, left the company after a dispute with its new Kremlin-linked owners.

Although Google is widely used in Russia, the homegrown search engine Yandex controls 60% of the country’s search market, reports say. Yandex.ru emerged as the most popular media channel in a recent study by the marketing research company TNS Russia, with 4.3 million daily visitors among people in Moscow aged 12-64. Google.ru was the fourth most popular media channel, behind Yandex.ru and two state-owned television stations, with 3.2 million daily visitors.