Russia Limits Foreign Ownership of Online Video Services

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The legislation will force services like Netflix, iTunes and Apple TV to change ownership for their Russia operations.

Russia's State Duma, the lower chamber of Parliament, has adopted in the first reading legislation introducing restrictions on the foreign ownership of online video services, a move targeting the likes of Netflix, iTunes and Amazon Prime.

Under the new law, set to come into effect June 1, foreign companies will be limited to holding a 20 percent stake in online video services operating in Russia. The legislation applies to professional services such as Netflix, Google Play and Apple TV but not to services like YouTube that rely on user-generated content.

Once the law is implemented, foreign companies must change ownership of their Russia outlets to continue operating.

The legislation still has to pass second and third readings in the Duma and be signed into law by Russian President Vladimir Putin. Past experience  indicates there is little hope for any major changes. Russian legislators, however, have said their might be room for exemptions from the law on a case-by-case basis.

"Guys, come to us legally," Andrei Lugovoi, a legislator who sponsored the law, was quoted as saying by the business daily Kommersant. "If you want to own more than 20 percent, turn to the government commission for foreign investment."

Lugovoi added that the law aims to establish who exactly owns any specific online video service. The legislation comes as part of the Russian government's drive to tighten control over media assets.

On Jan. 1, 2016, a similar legislation came into effect, limiting foreign ownership of Russia-based media companies to 20 percent. The legislation forced 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 entered a joint venture with a local company to continue distributing its channels in Russia.