No unanimity

There is still no unanimity among companies about how to interpret the law, says Vladimir Lebedev, business development director at Stack Group, which runs Moscow’s Stack.М1 and Stack.HTH datacentres.

“Some

believe that complying with it would be enough to transfer personal data collection to Russia, while the collected data could then be stored abroad,” he says. “In that case, each company would have to invest between RUB100,000 [$1,700] and RUB1m [$17,000] a month.”

But, according to Lebedev, if the entire data infrastructure is transferred to Russia, it would cost companies at least RUB5m ($85,000) to RUB10m ($170,000) a month. Also, investment in IT infrastructure, IT support and amendments to internal IT and business processes could require millions more rubles.

Alexis Rodzianko, president and CEO of the American Chamber of Commerce in Russia, says the law is “broadly drafted and subject to many possible interpretations, which will become clear as time goes by and as legal precedents are set”.

“But the immediate impact of the law is the increased perceived uncertainty of operating in Russia and potentially heightened regulatory risk,” Rodzianko adds.

“So I think the effect of the law, first of all, is to increase the level of risk for those operating in Russia and increase the level of perceived risk for those who are thinking of coming to Russia.”

Other observers agree that the new law is likely to harm the Russian economy, which is already in a bad shape.

“The measure is likely to have a negative impact on the entire economy, and GDP will shrink by 0.25% as a result of it,” says Anton Guskov, a spokesman for the Association of Trading Companies and Manufacturers of Electrical Household and Computer Equipment.
“However, the law is the law, and companies are doing what they can to comply with it.”