It's the latest development in the tick-tock of two stories: the reactions of the world's governments to the Snowden revelations that the NSA has their entire populations (and leaders) under deep surveillance; and Russia's steady march to a totalitarian Internet that's like Iran's halal Internet, with Putin-authoritarian characteristics.
The Russian law uses copyright enforcement as part of its cover -- something we've seen before, as when Russian cops started seizing the computers of independent newspapers under the rubric of hunting for pirated software, incidentally availing themselves of details of the journalists' confidential sources and notes -- and arrogates to the state the right to issue censorship and disconnection orders for alleged infringement.
The new regime puts Russia in a similar position to China: a huge market for Internet users, with a massive censorship system that can block noncompliant foreign Internet services. In China, this has resulted in companies like Yahoo and Google locating their servers within the grasp of Chinese spies (who used them to hack both the American Internet companies and spy on internal dissidents, prompting Google to eventually leave China), as the only way to get access to the market and compete with homegrown, regime-friendly services.
In the coming months, the major Internet companies will have to decide whether to abandon the Russian market to local competitors, or to locate data-centers on Russian soil and become a de facto instrument of Russia's internal system for spying on and neutralizing the political opposition to the country's authoritarian regime.
Complicating this is the Chinese experience: companies that sold out to China found that the Politburo rewarded their "flexibility" by milking them of their trade secrets and expertise, then went ahead and tipped the scales in favor of Chinese companies whose owners were crony-chummy with China's political elite.
Any selling out for access to the Russian Internet market will likely head down the same road -- a few years' worth of complicity in attacks on gay rights activists, a few years' worth of helping to imprison people who use curse words (but only if they're the sort of people the Kremlin needs an excuse to jail) -- only to find your company eventually given the boot under one of the same Kafkaesque excuses, its servers seized, and a locally run business like Yandex or Vkontakte getting your market-share.
Speaking of Vkontakte -- the "Russian Facebook" -- remember that the site's founder Pavel Durov was apparently forced to sell his stake in the company earlier this year, after taking part in anti-Putin rallies. The new owner is a Kremlin-affiliated oligarch whose fortune was kickstarted by fire-sale-priced access to media assets seized from another oligarch who'd fallen out of Kremlin-favor.
In its way, this is a perfect microcosm for the ideological bankruptcy of contemporary business ethics: companies chasing short-term profits through access to "emerging" markets get into favor by participating in surveillance and censorship, by helping the state spy on, imprison and torture their users, by helping to control pro-democracy movements by shaping the public perception of media events -- then, after a few years, they're tossed out anyway.
I wish I was more hopeful about this, but I fear that all the lessons from Silicon Valley's Chinese experience will be deliberately forgotten in the pursuit of Russian users.
(Images: Kremlin, Harry Popoff, CC-BY; Vladimir Putin Red Square - That's My Boy!! Хорошо, молодец!!!, IoSonoUnaFotoCamera, CC-BY-SA)