Proposed Restriction for Russian Online Video Services to Hit Google Play and iTunes

MOSCOW, RUSSIA -A general view of Red square and Kremlin-Getty-H 2016
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YouTube, however, will not be affected, as it is considered a supplier of user-generated content.

Apple's iTunes and Apple TV and Google Play are to be hit by a Russian draft legislation introducing restrictions on foreign ownership of online video services.

Under a draft law penned by the Media Communications Union (MKS), an industry association that includes Russia's major telecom companies and media groups, foreign ownership of online video services operating in Russia will have to be limited to 20 percent stakes.

Google Play, iTunes and Apple TV will be directly affected by the legislation because they offer, in addition to other content, movies and television services and shows, the local business daily Vedomosti reported.

According to the report, if the draft is adopted, foreign video services will have to pull out of Russia or change ownership to comply with the law.

Vedomosti quoted an MKS representative as saying that Apple and Google will have the option of requesting an exemption through the government commission for foreign investment.

Apple and Google haven't released subscriber figures for Russia, but iTunes and Google Play are considered to be among the market leaders, while Apple TV is less popular.

Google and Apple did not reply to The Hollywood Reporter's request for comment.

Meanwhile, contrary to initial fears, the legislation won't affect YouTube.

"Services that provide user-generated content, such as YouTube, as well as social media and search engines won't be affected by the legislation," MKS said in a statement sent to THR.

Although the draft has yet to be approved by Russian parliament, its chances for passing through parliament are high. A similar legislation concerning foreign ownership of media companies was adopted with ease two years ago.

That legislation came into effect on Jan. 1, 2016, forcing Sweden's Modern Times Group, which owned 39 percent of the Russian TV company CTC Media, to sell its stake and pull out, while Discovery was forced to enter a joint venture with a local company to continue distributing its channels in the country.