New law promoting Russian software on smartphones sold in Russia

On 21 November 2019 the Russian State Duma (lower chamber of the Russian parliament) adopted a new law amending the Federal Law on Protection of Customers’ Rights (the "New Law"). The New Law was further approved by the Federation of Council of Russia (upper chamber of the Russian parliament) on 25 November 2019. It affects smartphones and other gadgets being sold in Russia. Starting from 1 July 2020, Russian software must be installed on such devices. The Russian Government must further specify exactly (i) what gadgets are affected; (ii) what Russian software should be installed; and (iii) the procedure for installing it.

In addition, a draft law imposing administrative liability for sale of the relevant gadgets without Russian software installed has been submitted to the Russian State Duma. Legal entities held liable for the relevant violation may be required to pay a fine of up to 200,000 Rubles (about 3,150 US Dollars). However, this draft law has not passed any readings in the Russian State Duma yet.

Further approval required

For the New Law to enter into force, it must be further approved and signed by the President of the Russian Federation. It appears very likely that the New Law will be signed by the Russian President shortly.

What’s the impact?

Based on the explanatory note for the New Law, it appears that it aims to facilitate the development of Russian software providers as well as to prevent foreign IT companies from abusing the Russian market. However, it is not yet clear what impact the New Law may have as the Russian Government will only provide the relevant clarifications after the New Law receives final approval. Potentially, it could have an impact on the business models of foreign manufacturers of smartphones and other gadgets and it appears that it could be a big change for these international players doing business in Russia. 

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