Draft requirements for advertising platforms

On 5 July 2022 the State Duma passed in the first reading draft law No. 141597-8 (“the bill”) setting out a range of amendments to the Federal Law “On Information, Information Technology and Information Protection”. The bill proposes the insertion in the law of a new Article 10.7 laying down the obligations of the owner of a website and (or) a webpage and (or) an information system and (or) a computer programme which is designed and (or) used as a means for its users to interact with each other for the purpose of selling (supplying) goods, performing work, rendering services, looking for suitable work and (or) recruiting required personnel by enabling users to post their own advertisements concerning the sale (supply) of goods, the performance of work, the rendering of services, the seeking of suitable work and (or) the recruitment of required personnel, thematically grouped according to the content of the advertisements, and by enabling users to respond to such advertisements independently, and which is visited by more than ten million Internet users located in the Russian Federation in the course of one month (“advertising platform”). Among other things, the bill proposes the following amendments as far as the obligations of an advertising platform owner are concerned:

• A definition of an advertising platform owner is established whereby such an owner must be a Russian legal entity or a Russian citizen who does not hold citizenship of any other state. The level of foreign ownership, control and management of interests (shares) in the capital of an advertising platform is limited to 20% (clause 7 of Article 10.7 of the bill)
• Requirements are established for the activities of advertising platforms in terms of compliance with Russian law, including prohibitions and restrictions prescribed by referendum and election legislation, observance of the rights and legitimate interests of individuals and organisations, and ensuring that a platform is not used for unlawful purposes or for the purpose of denigrating an individual or particular categories of individuals (clause 1 of Article 10.7 of the bill)
• If an advertising platform is found to contain information that is disseminated in violation of the law, the federal executive body in charge of control and supervision in the area of mass media, mass communications, information technology and telecommunications will send the owner of the advertising platform an order to take measures to remedy the violations. In the event of repeated failure to comply with such an order in the course of one year, the federal body in question may file a petition with a court for the restriction of access to the advertising platform (clause 10 of Article 10.7 of the bill)
• The bill also makes it obligatory for advertising platform owners to display an email address for legal correspondence, as well as their surname and initials (in the case of an individual) or operating name (in the case of a legal entity); to make it possible for audience size to be examined by an authorised organisation and to enable the integration and interaction of the platform with the unified identification and authentication system and the unified portal of state and municipal services (clause 1 of Article 10.7 of the bill)

What do these changes mean for businesses?

If passed, the proposed law would mark a new phase in the regulation of advertising platforms. Companies would face hefty requirements that could affect their growth performance and would lead to tighter control over the IT sector.

Furthermore, advertising platforms that are more than 20% foreign-owned would have two months in which to reduce that level of ownership in order to avoid being blocked in the territory of the Russian Federation. Having to take urgent measures of this kind within a short period of time may give rise to substantial tax and business risks.

The bill has so far only been passed in the first reading. We will continue to monitor the progress of the bill and keep you informed of any changes.

How can B1 help?

The B1 can provide prompt support in discussing matters relating to changes in the obligations of advertising platform owners. Our services may include:

• Assessing the tax and legal risks for a company
• Analysing the structure of a group to determine compliance with the proposed requirements
• Developing a target structure for the company based on the requirements of the law
• Developing a plan for transition to the target structure taking account of tax and legal implications
• Assistance in the creation of a new business model based on the new target structure
• Liaising with executive bodies in charge of control and supervision in the area of mass media, mass communications, information technology and telecommunications