Internet-companies proposed their own amendments to upcoming regulation for OTT-services in Russia

Internet companies have almost agreed with certain provisions of proposed regulations for OTT-services operating in Russia, but also have their own amendments in order to improve regulation and exclude from its scopes Russian projects, including those, which already have been funded by foreign investors and operate in Russia.

As long as 20% barrier for foreign investors is a must for new business realities of OTT-services in Russia, the companies, concerned by this measure, try to mitigate its impact on them. They proposed to separate foreign and Russian services and provide different regulation for them. For foreign services 20%-ownership will remain in force and Russian projects will be obliged to operate in Russia through legal entities incorporated in Russia.

What means foreign OTT-service under proposed amendments? Such service is provided by overseas legal entity, not incorporated in Russia and its audience in Russia is not more than 50% of all its audience. In order to be qualified as a Russian service, the local, Russian, audience of OTT-service must be more than 50% of all audience and the owner of such service must be a legal entity, incorporated in Russia, or natural person with Russian citizenship.

But the main target is such popular services like Netflix. First of all it is proposed to decrease the audience limits for them in order to be included in special registry of OTT-services. It would be not 100.000 visitors per day; it would be 20.000 visitors per day. Competition is complicated thing and “foreign services must understand it”. Russian services, if you can call them so, because some of them are funded and partially managed by “foreigners”, want more “competition opportunities” in Russian internal market and such companies like Netflix can take their potential customers.

Actually the main intention of the law was control, from certain angle, of companies providing media services in Internet (for traditional broadcasting there is already necessary regulation), but the more amendments have been proposed, the more this draft law becomes a means of competition between companies where the prize is total, perhaps not total but significant, control over the entertainment market in Russia.

Authors of amendments are afraid of, that foreign services, like Netflix, despite the adoption of proposed regulation, anyway will attract more customers or viewers in Russia than Russian, domestic, services. Therefore, Russian companies endeavour to improve “conditions” in domestic market and make them more favorable and comfortable for their business.