The article is written by Aditya Singh of Symbiosis Law School, Noida. This article deals with the new legislation in Russia, the motive of which is to ban the smart devices which enter the Russian market not pre-installed with domestic Russian applications, which has led to the technological split between East and West by positioning the tech giant Apple against Russian President Vladimir Putin.
Table of Contents
Introduction
In November 2019, the Russian Parliament passed a new legislation that came to be known as the “Law against apple”. According to this legislation, all smart devices will be expected to preload a variety of apps that could enable the Russian Government to get access and collect information of its citizens, such as their location at any given point or to know their financial status or even to retrieve their private conversations.
It is also being contended that the smart devices which are not pre-installed with the Russian Softwares will get banned, which has put the U.S. tech giant Apple against the Russian President Vladimir Putin. This may lead to the unintended conclusion of the withdrawal of Apple devices from the Russian markets. The law, which will be effective from 1 July 2020, is claimed by the legislators to help Russian tech firms to become more competitive with the western firms and to offer consumers the “right to choose” by providing domestic alternatives.
Background of the legislation and its scope
The deputies of the State of Duma (lower house of the Russian Parliament) led by Sergey Zhigarev, Chairman of the Committee on Economic Policy; Vladimir Gutenev, Oleg Nikolaev and Alexander Yushchenko presented the bill in the State Duma regarding the ban on the sale of smart devices such as smartphones, smart TVs, computers in Russia without domestic software pre-installed in them. Together with the bill on amendments to the “Law on the Protection of Consumer Rights” deputies submitted a draft on amendments to the Code of Administrative Offenses.
In the first reading, the State Duma (lower house of the Russian Parliament) adopted a Bill according to which Russian Softwares have to be pre-installed while selling certain categories of technically advanced products. Furthermore, the Government of the Russian Federation shall create a list of such kinds of gadgets and Russian programs, like Smart TVs, Computers and Smartphones, as was referred by the authors of the bill. The initiative offers domestic companies legal means to promote their programs with Russian users, as stated in the explanatory note attached to the Bill.
The bill was promoted in the nation as a way to offer additional legal mechanisms for domestic enterprises to encourage their Russian user programs. The reason provided was that the electronic products currently being purchased already include certain western software and individual applications pre-installed in them, giving the impression that there are no domestic alternatives available and now to give the right to choose to the Russian customers they are including certain preinstalled domestic alternatives in such products. The fear is that some products may not be able to handle these software leading to these products being written off the market and companies withdrawing them from the sale.
The law on gadgets comes into force this July 2020 one motive behind this bill could be to prevent the dominance of the western tech sold within the country, another aim could be about surveillance, geopolitics, and control just like the recent Sovereign Internet Law facilitating the cut-off from the world wide web in case of an emergency. As for the government, mandating software applications on consumer devices always pose a threat, as there are concerns that some of these programs could possibly be used to bypass security and be used for surveillance by the government. The Association of Trading Companies and Manufacturers of Household Electrical Equipment and Computers (RATEK) members – Google, Apple, Samsung, Phillips, Huawei, etc., spoke against the legislation, claiming it could negatively affect market growth and cause the industry to be monopolised.
A list of applications has been published by the Russian Federal Antimonopoly Service which includes government developed applications for payment of taxes and fines, for bank services, using navigation facilities and for social media platforms linked to official bodies. These applications could have the ability to collect and submit financial details, location, communications, and more information without the consent of the consumer. Various lists of software versions are built for each product category. Like for smartphones, the following: browser, antivirus, maps, online personal payment services, instant messenger, and other public utilities. The list will be complemented with audiovisual resources and applications broadcasting 20 necessary public channels for tablets, computers, and smart televisions.
It is believed that the manufacturers have little or no time to prepare themselves for the law to come into force. Pre-installation for smartphones is compulsory from 1 July 2020. However, manufacturers must find developers, sign agreements with them, perform tests to ensure all devices are preinstalled. Testing alone takes at least six months, but all regulations are still being formulated and at their best could be accepted by April.
Specific applications from different developers will not be mentioned, as this violates competition law. The type of program and the developer specifications will be specified. The manufacturer must determine which application to choose. The manufacturer while selecting the applications must abide by the following criteria:
- the software right is owned by a Russian individual;
- the application is marketed in Russia;
- the developer has not breached the Personal Data Act for over five years.
It was further clarified that the Federal Antimonopoly Service policies are based on three regulations: guidelines for installing applications, software, and system specifications. In accordance with the timeline suggested by the FAS:
- Starting from July 1, 2020, pre-installation for all smartphones with Russian software will become mandatory;
- from 2021 – for tablets;
- from 2022 – for computers; and
- from 2023 – for Smart TV and set-top boxes.
Why did the legislation start being known as Russia’s “Law against Apple”?
The bill, which will come into effect next July, has been called the “rule against Apple,” because it impacts especially the tech giant, known for its emphasis on maintaining tight control over the applications it allows on its smart devices. A penalty of about 200,000 Rubles ($3,130) will have to be faced by the companies who do not comply with the recommendations. The struggle with Apple could be meant as an example for other tech giants, especially Google (owner of Youtube) and Facebook, as these companies pose significant challenges to the Kremlin’s information monopoly.
Officials from Apple could believe that the Russian market is too small for a change in strategy but the company recently demonstrated a willingness to make another questionable concession. Since November 2019 Apple’s maps and weather applications, when used within Russia, marked the region of the Crimean peninsula as Russian, which originally belonged to the Ukrainian region and was illegally occupied by Russia in 2014. Also when used internationally, Crimean cities are displayed without (unusually) showing the country in which they are while Apple maps add an unusual dotted line that divides Ukraine from the peninsula.
In the hope of smoothing relations with Moscow, Apple may have offered this olive branch but its actions have led to a growing sense of insecurity in Ukraine, where the foreign minister Vadym Prystaiko has accused Apple of ‘not giving a damn’ about the country.
According to The Bell reports: A requirement to introduce third-party apps to the Apple ecosystem will tantamount to be a prison breakdown. This poses a serious security threat and cannot be accepted by the organisation. Apple usually prevents third-party software from being preloaded with hardware on its program. But when the act comes into force in July 2020, Apple will be forced to either accept or to exit an approximate $3 billion market if it does not comply. Apple never supported third-party apps globally on iOS devices. This could have been software from phone carriers and their ‘partners’ in the earlier years of the iPhone. But it is still popular to include pre-installed apps from Verizon on an Android phone bought from, say, Verizon.
The government’s mandate of these apps is recent, but the idea remains the same: it is expected of Apple to resist it and to take the iPhone out of the Russian market if possible. As the most significant question is that if Apple yields to these demands in one country, where does it stop? As it will become a precedent and it is quite surprising that China even has not yet passed a law like this. But if that were ever to happen in the near future, it would put a quite substantial financial burden on Apple, as the Russian iPhone market amounts to roughly $3 billion, that is true, but for Apple it is insignificant. “Greater China” on the other hand accounts for around $13.5 billion in revenue for Apple in the recent quarter alone.
The interests of Russia lie in attempting to regulate its people autocratically, which seems to fundamentally contradict Apple’s policies and its commitment to protecting the privacy of its users irrespective of where they are located and what the government is asking for. The “law against Apple” shows how trillion-dollar technological firms face the special privileges of the nations in which they work, but Apple has not stopped trying to find a solution.
Penalties for not following the provisions of the legislation
The draft submitted by the deputies on amendments to the Code of Administrative Offenses stated penalties for the violation of the provisions for up to 200 thousand rubles. For violation of the norms mentioned in the bill, it entails the imposition of an administrative fine of 30 thousand to 50 thousand rubles on the officials, on legal entities the penalty ranges from 50 thousand to 200 thousand rubles, which is indicated in the bill on amendments to the Code of Administrative Offenses, introduced simultaneously with amendments to the law on the Protection of Consumer Rights.
The manufacturers who have adopted the specifications made by the Russian Government
The South Korean tech giant Samsung was the first major smart devices manufacturer to declare that it will abide by the Russian controversial legislation requiring smartphone manufacturers to sell their devices with pre-installed software that has been approved by the government. Samsung is the second most popular smartphone provider in Russia, acquiring 28% of the Russian market. Chinese manufacturer Huawei is in the top position with 33% of all sales and Apple controls less than 10% of the market. Therefore, Samsung Electronics will be able to comply with and adapt the company activities in compliance with the adopted regulations under Russian law, as established by the regulator.
The stance of Samsung theoretically places it in conflict with its rival Apple, the U.S. based company stating that it would not allow third-party applications on its devices and adding that it may be pressured by this law to rethink its engagement with Russia. Samsung, on the other hand, claimed the modification of the law does not impact the company’s plans to continue operating in Russia. The company also stressed that the company already works with the Russian application developers who have previously sold products with the e-mail application Mail.ru and Yandex search functions, pre-loaded in them.
Conclusion
This type of regulation is not at all shocking in particular, as Russians have always been more enthusiastic regarding surveillance in comparison to the Western nations. However, we are now seeing the inevitable incorporation of mass surveillance into the network infrastructure and that’s a terrifying change. In fact, in addition to increasing the cost of apps, the initiative would result in a decrease in user data protection and corruption with regard to the recognition of Russian app status.
The recent clampdown against the Chinese tech, like Huawei, and perceived envy of Putin to China’s model where such a central control was deployed behind its “Great Firewall” is believed to have pushed the Russian President Vladimir Putin to start this “technological war” to gain even more central control in the technology and information sectors. Critics believe that the government will seek to create an Internet firewall similar to that in China, but the Kremlin on the contrary claims that this will improve cyber protection.
After the bill comes into force the manufacturers and proprietors of operating systems in Russia would be forced to commercially collaborate with developers of domestic software, such as Yandex and Mail.ru Group, an expense which they may have previously avoided. However, the July deadline for ‘Apple’ legislation would require Tim Cook, CEO of Apple Inc. to set a precedent for global international relations, privacy, and digital sovereignty by either placing future revenues at risk or defending Apple’s values.
LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:
