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Here Are the Risks Twitter Faces in Russia

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Feb. 22 2019, Updated 7:32 a.m. ET

Twitter risks fine in Russia

Twitter (TWTR) is not at ease in Russia, as the government there is pushing it to store data on its Russian users locally. Twitter currently doesn’t disclose how many people it hosts on its social network in Russia. But data from StatCounter shows it is the top social network in the country with a 22.8% market share as of January compared to 22.7% for Facebook (FB), 8.6% for Google’s (GOOGL) YouTube, and 2.7% for Verizon’s (VZ) Tumblr. Verizon came to own Tumblr through its acquisition of Yahoo a few years ago.

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Russia’s communications regulator said last month that it was opening administrative proceedings against Twitter and Facebook for failing to comply with the country’s personal data localization laws. According to a report from the Wall Street Journal, the move by the regulator puts Twitter and Facebook at risk of having their operations restricted or blocked in China. The companies could also face fines.

Companies worried about costs of relocating data

Russia is not alone in demanding that companies store digital data on its citizens locally. India is also making a similar push and many large American multinationals are not impressed with it. Reuters reported last year that Facebook and PayPal (PYPL) are some of the companies that feared India’s data localization law would drive up their costs and affect planned investments. PayPal launched domestic operations in India in late 2017 after Google introduced a rival service in the country.

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