The Economist - UK (2022-02-19)

58 Business TheEconomistFebruary19th 2022

state control, economic size, technological

savoir­faire  and  stability  of  regime.  They

also  failed  to  start  25  years  ago.  So  they

need  ways  to  achieve  what  goals  they  can

piecemeal, by retrofitting new controls, in­

centives and structures to an internet that

has matured unsupervised and open to its

Western begetters.

Russia’s efforts, which began as purely

reactive  attempts  to  lessen  perceived

harm,  are  becoming  more  systematic.

Three  stand  out:  creating  domestic  tech­

nology,  controlling  the  information  that

flows  across  it  and,  perhaps  most  impor­

tant,  building  the  foundational  services

that underpin the entire edifice. 

Take  the  technology  first—micropro­

cessors, servers, software and the like. Al­

though  Russia  has  some  notable  firms  in

these  areas—Baikal  and  Mikron  in  semi­

conductors,  abbyyand  Kaspersky  in  soft­

ware—for  the  most  part  companies  and

government  agencies  prefer  Western

wares.  Russian  companies’  share  of  the

semiconductor market was less than 1% of

the global total in 2020 according to emis,

a  data  provider.  In  servers  and  business

software the situation is much the same.

The government has made moves to re­

start  a  chipmaking  plant  in  Zelenograd

near Moscow, the site of a failed Soviet at­

tempt to create a Silicon Valley. But it will

not operate at the cutting edge. So although

an  increasing  number  of  chips  are  being

designed  in  Russia,  they  are  almost  all

made by Samsung and tsmc, a South Kore­

an and a Taiwanese contract manufacturer.

This could make the designs vulnerable to

sanctions.  An  added  problem  is  that  they

are  often  not  up  to  snuff.  Some  experts

have doubts about the capabilities of Rus­

sia’s  home­grown  Elbrus  processors,  de­

signed by a firm called the Moscow Centre

of spracTechnologies. 

For crucial applications such as mobile­

phone networks Russia remains highly re­

liant on Western suppliers, such as Cisco,

Ericsson and Nokia. Because this is seen as

leaving  Russia  open  to  attacks  from

abroad,  the  industry  ministry,  supported

by  Rostec,  a  state­owned  arms­and­tech­

nology  giant,  is  pushing  for  next­genera­

tion 5gnetworks to be built with Russian­

made  equipment  only.  The  country’s  tele­

coms  industry  does  not  seem  up  to  the

task.  And  there  are  internecine  impedi­

ments. Russia’s security elites, the siloviki,

do  not  want  to  give  up  the  wavelength

bands best suited for 5g. But the only firm

that could deliver cheap gear that works on

alternative  frequencies  is  Huawei,  an  al­

legedly  state­linked  Chinese  electronics

group  which  the  silovikidistrust  just  as

much as security hawks in the West do.

It  is  at  the  hardware  level  that  Russia’s

stack is most vulnerable. Sanctions which

might  be  raised  if  Russia  were  to  invade

Ukraine would probably see the country as

a wholetreatedasHuaweinowisbyAmer­

ica’sgovernment.Anychipmakeraround

theworldthatusestechnologydeveloped

inAmerica to designor makechips for

Huaweineedsanexportlicencefromthe

Commerce DepartmentinWashington—

whichisusuallynotforthcoming.Ifthe

samerulesareappliedtoRussianfirms,

anyonesellingtothemwithouta licence

couldthemselvesriskbecomingthetarget

ofsanctions.Thatwouldseetheflowof

chipsintoRussiaslowtoa trickle.

WhenitcomestosoftwaretheRussian

stateis usingitsprocurementpower to

amp up demand. Government institu­

tions, from schools to ministries, have

beenencouragedtodumptheirAmerican

software, including Microsoft’s Office

packageandOracle’sdatabases.Itisalso

encouragingthecreationofalternativesto

foreignservicesforconsumers,including

TikTok,WikipediaandYouTube.

FromRussia,withlikes

Here the push for indigenisation has a

sturdierbaseonwhichtobuild.According

toGroupm, theworld’slargestmediabuy­

er,Yandex,a Russianfirmwhichsplitsthe

country’s searchmarketwith Alphabet’s

Google,andvk, asocial­mediagiant,to­

getherearned$1.8bnfromadvertisinglast

year,morethanhalfoftheoverallmarket.

vk’s vKontakte andOdnoklassniki trade

placeswithAmericanapps(Facebook,In­

stagram)andChineseones(Likee,TikTok)

onthetop­tendownloadslist(seechart1).

Thisdiverse systemisobviouslyless

vulnerabletosanctions—whicharenoth­

inglikeasappealinga sourceofleverage

hereastheyareelsewhere inthestack.

MakingAlphabetandMetastopoffering

YouTube andWhatsApp, respectively,in

Russia would make it much harder for

AmericatolaunchitsownsortiesintoRus­

siancyberspace.SowoulddisablingRus­

sia’sinternetatthedeeperlevelofproto­

colsandconnectivity.Allthismaypush

Russianstousedomesticofferingsmore,

whichwouldsuitMrPutinwell.

AsinChina,Russiaisseeingtheriseof

“super­apps”,bundles ofdigital services

wherebeinglocalmakessense.Yandexis

notjusta searchengine.Itoffersride­hail­

ing,fooddelivery,music­streaming,a dig­

italassistant,cloudcomputingand,some­

day,self­drivingcars.Sber,Russia’sbiggest

lender,iseyeinga similar“ecosystem”of

services,tryingtoturnthebankintoa tech

conglomerate.Inthefirsthalfof 2021 alone

itinvested$1bnintheeffort,ontheorder

ofwhatbiggishEuropeanbanksspendon

informationtechnology(it).

Structural changesintheit industry

aremakingsomeofthisRussificationeasi­

er. Take thecloud. Its data centresuse

cheapserversmadeofoff­the­shelfparts

andothereasilyprocuredcommoditykit.

Muchofitssoftwareisopen­source.Sixof

thetenbiggestcloud­serviceprovidersin

RussiaarenowRussian,accordingtoDmi­

tryGavrilovofidc, a researchfirm.Hesays

most successfulonesare“moving away

from proprietary technology” sold by

Western firms (with the exception of

chips).AndasintheWest,cloudcomput­

inghasallowedspecialisedproviders of

onlinesoftwaretobreakthrough;inRussia

thishasincludedamocrm, MiroandNew

CloudTechnologies.

Importsubstitutionisaslowprocess

andsuccessisbynomeansguaranteed.

However,itcannolongerbeconsidereda

“joke”,inthewordsofAndreiSoldatov,edi­

torofAgentura.ru,anonlineportal,and

co­authorof“TheRedWeb”,a bookabout

digital activism inRussia. “The govern­

mentismakingsteadyprogressindrag­

gingpeopleintoadomesticdigitalbub­

ble,”herecentlywrote.

IftechnologyisthefirstpartofRussia’s

stack,the“sovereigninternet”isthesec­

ond.Itiscodeforhowa statecontrolsthe

flow ofinformationonline.In 2019 the

governmentamendedseverallawstogain

morecontrolofthedomesticdataflow.In

particular, these require isps to install

“technical equipment for counteracting

threatstostability,securityandfunctional

integrity”. This allows Roskomnadzor,

Russia’sinternetwatchdog,tohave“mid­

dleboxes”slippedintothegapbetweenthe

publicinternetandanisp’s customers.Us­

ing“deeppacketinspection”(dpi), a tech­

nologyusedatsomeWesternisps toclamp

downonpornography,thesedevicesare

abletothrottleorblocktrafficfromspecif­

icsources(andhavebeendeployedinthe

campaign against Tor). dpi kit sits in

rooms withrestrictedaccesswithinthe

isps’facilities andiscontrolleddirectly

froma commandcentreatRoskomnadzor.

Rouble-rousing

Russia, top ten social-media apps, by time spent

Source:AppAnnieIntelligence *January-June

1

Origin:

Russian Western Other

10

9

8

7

6

5

4

3

1

21*201918171615142013

Rank