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Russia fines Zoom $1.18 mln for operating without local office -RIA

The Zoom Video Communications logo is pictured at the NASDAQ MarketSite in New York, New York, U.S., April 18, 2019. REUTERS/Carlo Allegri/File Photo

According to the RIA news agency, a Russian court fined Zoom Video Communications (ZM.O) $1.18 million on Tuesday for operating without setting up a local office. An email seeking comment received no immediate response from Zoom.

Moscow and global technology businesses have been at odds over content, censorship, data, and local representation in a long-running confrontation that erupted in February 2022 when Russia pushed its armed forces into Ukraine.

According to Judge Timur Vakhrameyev, quoted by RIA, the sentence was set at a tenth of Zoom’s Russian income for 2022.

Last week, a court fined Zoom 15 million roubles for what it claimed were many instances of the company failing to keep data on Russian individuals on a server there.

Other businesses, including Alphabet’s (GOOGL.O) Google and Apple (AAPL.O), have recently received significant fines in Russia.

Meta (META.O) was found guilty of “extremist activity” in Russia, which it contested not long after Russia began what it terms a “special military operation” in Ukraine. As a result, its Facebook and Instagram platforms were shut down.

The Zoom case’s conclusion will have a big bearing on the future of international internet companies doing business in Russia. It serves as a warning that businesses must be careful to follow local laws to avoid paying big penalties and maybe having their activities disrupted.

The difficulties Western technology businesses encounter when trying to join the Russian market are highlighted by Zoom’s recent 118 million dollar punishment for operating without a local presence there. Beyond Zoom, the ramifications of this case impact the larger IT sector, user data security, and the future of international businesses doing business in Russia. What precedent will this case make for the Russian IT industry, and how Zoom’s discussions with Russian authorities are still to be seen?

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