What next for social networking site VKontakte?

By Elena Pakhomova

VKontakte, Russia’s answer to Facebook, is in trouble. Last week, police searched the offices of the country’s most popular social networking site in connection to a road traffic incident. At the centre of the investigation is VKontakte’s 28-year-old founder Pavel Durov, who is suspected of being involved in a hit-and-run after a driver in a white Mercedes injured a traffic officer by ignoring an order to stop. The car is allegedly registered to VKontakte, and, according to media reports, the man behind the wheel was Durov — an allegation his spokesman has vehemently denied. Durov, he added, doesn’t even own a car.

The police search, which extended to Durov’s home, has sparked concern among Russian netizens and internet watchers who see the move as the latest in a line of government attempts to silence political debate online. They argue that VKontakte’s popularity not to mention its use last year to organise protests have made it a prime target. The social networking site, which is far more popular in Russia than Facebook, has roughly 190 million registered users around the world and targets a Russian-speaking audience. Although dubbed “Russia’s Facebook” by western press, differences between the two mean that Russians often have accounts on each network.

“Few share VKontakte’s values but it’s true to say that 90% of its success is due to Durov”

The main difference between them is how VKontakte is often used: to illegally watch music, films and porn that have been uploaded by other users. The company’s failure to remove unlicensed content has meant that it has been dogged by controversy since it launched in 2006. Just last December, the Office of the US Trade Representative published its third annual list of markets that infringed intellectual property rights. The report stated that while Russia had taken several positive steps to curb infringement of copyright, VKontakte had much to answer for. “VKontakte is a strange company. An outsider in the modern internet business,” Elia Kabanov, a prominent Russian blogger and editor of blog metkere.com, told The Calvert Journal. “Few share the company’s values but it’s true to say that 90% of VKontakte’s success is due to Durov.”

In a further twist, while the investigation was underway, an investment fund belonging to Ilya Sherbovich, a board member at the state-owned oil giant Rosneft, snapped up 48% of VKontakte shares following months of negotiation. The new shareholders have promised to keep Durov, who owns 12% of the social networking site, on board as chief executive officer. The remaining 40% of shares belong to business tycoon Alisher Usmanov who topped the UK’s Sunday Times Rich List this week.

Pavel Durov speaks during the Digital Life Design conference on 24 January 2012 in Munich, Germany. Photograph: Nadine Rupp/Getty Images

Until last year, Russian authorities paid scant attention to the internet and its potential as a mobilising and free speech tool. The change is a result of waves of protests that have rocked the capital since December 2011 when Muscovites demonstrated against dubious parliamentary elections. In November 2012, the government tightened its grip on the internet with the passage of a controversial new law, which allows the authorities to shut down sites promoting child pornography, suicide or substance abuse without the need for a court order. Although ostensibly to protect children from harmful online content, critics argue that the legislation’s wording is vague and point to the websites that have since been blocked as evidence of its failure. According to a Human Rights Watch report, as of March 2013, the Federal Service for Supervision of Communications, Information Technology and Communications (Roskomnadzor) had received 33,288 requests to place web content on the blacklist, which contained 4,275 items. Websites to have been banned so far include Russian-language entertainment site Lurkmore and the Wikipedia entry on cannabis; both have since been unblocked after content deemed objectionable was either deleted or edited to meet government requirements.

“What’s happening with VKontakte resembles the beginning of the Noughties when structures close to the Kremlin took over the country’s oil companies and media, like NTV channel or Ekho Moskvy radio station or Yukos,” says Kabanov. “You wouldn’t have thought the same would happen with the internet because the state hasn’t looked in this direction for more than ten years.” The situation with VKontakte, he adds, is a direct consequence of the growing number of internet users in Russia, where “more than half of the population regularly go online”. According to Internet World Stats, by mid-2012, there were roughly 61 million internet users in Russia, equivalent to 44% of the population.

“I think even in China or Kazakhstan creating a business will be easier, even with their censorship”

Nickolay Kononov, a journalist and author of The Durov Code, a book about VKontakte, agrees that the social networking site has become a powerful media entity in its own right — one that can be compared to a federal television channel in terms of its coverage and influence. In his latest article for Hopes&Fears, a Russian online magazine about the entrepreneurial world, Kononov offered up five possible endings to the VKontakte story. The most credible of these posits that Durov will eventually be obliged to sell his share in the company or worse still, leave Russia.

When Durov failed to attend the local police station in St Petersburg for questioning, another hypothesis was put forward by TV channel Dozhd (Rain), which reported that he was in the US, preparing to launch a new social network and VKontakte rival, Telegra.ph. VKontakte has denied the claim and Durov himself posted a message in an online community, explaining that the concept of his new project was a cloud hosting service for start-ups and not a social networking site.

Whatever the fate of VKontakte, the police investigation is considered a clear signal to those in the industry. According to Kabanov, netizens and those working for internet-related companies, are definitely concerned. So much so that they are starting to look beyond Russia for their survival: “Internet businesses should be created outside of Russia and target other markets. I think even in China or Kazakhstan creating a business will be easier, even with their censorship. There you understand the rules at least.”