Gowling WLG (International) Inc - Russia
Russia passed a new law, which requires certain types of devices – most likely smartphones, computers and some types of television, that enter the Russian market – to have Russian software pre-installed. However, at this early stage, the law remains vague. Although it appears part of an effort to promote the Russian tech industry, concern is being voiced about it in the country and abroad.
The so-called Law on Software Pre-installation was adopted in December 2019 and will come into effect in July 2020. Its wording is both cautious and vague; as it stands the law does not list the devices and software that will require pre-installation or outline any procedures for its implementation – this will be determined by the government at a later stage in subordinate legislation. However, it is generally expected that the new law will primarily apply to smartphones, computers and televisions with smart functions.
Proponents of the law claim that it aims to promote the Russian tech industry and simplify technology for customers. Further reasons are provided in the bill’s explanatory note, which include enabling Russian consumers to use the devices “without having to download applications and other software” and ensuring “the protection of interests of Russian internet companies”.
Devices and Russian software
Even though the law in its current version does not provide sufficient information on the types of software for which pre-installation is mandatory, it is generally assumed that it will most likely include the Russian e-document application Gosuslugi, as well as a Russian search engine and local maps.
Unfortunately, without the subordinate legislation, it is not yet clear whether the obligation to install the software will fall on the manufacturer or the vendor. There are also questions about the specific number of obligatory software programs and whether consumers will be able to remove them at a later point.
However, it is clear that the law does not prohibit foreign software per se, but rather makes requirements for having both Russian and foreign versions of similar apps (eg, search engines).
Market participants react
The initiative has been widely, and often critically, discussed in local and neighbouring business communities. The Association of Trading Companies and Manufacturers of Electrical Household and Computer Equipment has expressed concerns, warning that the legislation may lead to the monopolisation of the Russian software market. Others have warned that there could be a spike in grey imports of devices into the market. The law has also provoked heated discussions among Russia’s neighbouring countries of Kazakhstan, Kyrgyzstan and Belarus at a recent Eurasian Economic Commission meeting.
Meanwhile, Russia's parliament – the State Duma – is now reviewing a draft bill on liability in the event of violating the pre-instillation law, proposing fines on legal entities of between Rb50,000 and Rb200,000.
Given the legal and technical uncertainties about how this law will actually be put into practice, it is advised that companies that may be affected take an active part in public discussions while the subordinate law is being drafted.