Mail.ru seeks to avoid prying NSA eyes in US expansion
Russia’s largest internet company is expanding into the US, trying to lure customers by keeping the data from its services offshore.
Mail.ru, which has more monthly users than any other Russian website, is targeting the US with a suite of mail and messaging apps under the My.com brand as it tries to crack what its chief executive Dmitry Grishin calls “the most competitive and most difficult market that has ever existed”.
Mr Grishin said the data centres for its US services would be based in the Netherlands, which he said was a “good neutral place” outside of the US and Russia that was “very liberal” and “respected globally”.
US internet companies have come under fire for handing over private data to US authorities since Edward Snowden leaked documents detailing a mass NSA surveillance programme earlier this year. Many technology companies insist they simply comply with the law and have even spoken out against reported attempts to siphon off information about their users.
The Netherlands has robust data protection laws and a broad definition of what constitutes personal data, as well as some large data centres. However, some privacy experts say keeping the data offshore would not be enough to stop the NSA accessing it.
Jeff Chester, executive director of the Center for Digital Democracy in the US, said the data may be more secure in Europe but the problem was it had to be shipped from the US.
“I don’t think it keeps it from the NSA at all because the data are collected here and shipped to the cloud, it doesn’t make a difference where it goes,” he said. “The NSA can access it during the transportation process.”
James Lewis, a security expert at the Center for Strategic and International Studies in Washington, said: “The location of the server makes absolutely no difference, particularly for Russian companies that have very close relations with their security services. Ask Snowden if he feels like his email is safer.”
Mail.ru, which is the first major Russian internet company to try to enter the US, is also opening a small sales and marketing office in Silicon Valley. My.com will use free services such as email and chat to drive traffic to its games apps, such as Jungle Heat, which operate using a freemium model.
Mr Grishin says more internet companies from around the world should try to compete in the US and in other foreign territories, rather than allow Silicon Valley companies to dominate globally.
“The world is getting more and more global, more German companies are going to launch in Israel, Israeli companies launch in Europe, Brazil in China: It is the only way to become more and more smart,” he said.
Mail.ru, which is listed in London with a market capitalisation of about $8.1bn, has largely managed to fend off competition from bigger American rivals such as Google, Facebook and Amazon. It is controlled by Russia’s richest man, Alisher Usmanov
Vkontakte, in which Mail.ru holds a 40 per cent stake, remains the Russia’s most popular social networking site and is growing faster than Facebook. Meanwhile, New York-listed Yandex is Russia’s leading search engine followed by Google and then Mail.ru.
Mail.ru is not the first Russian internet company to set its sights overseas. In 2011 Yandex started operations in Turkey, but as of September had only managed to grab 2.2 per cent of the local search market, according to StatCounter, a data collection group.
Mr Grishin said expanding in the US would help the group learn new strategies that could be used at home.
But he says the company is treading carefully, adopting a “start-up outlook” in the US and wants to work closely with users to adapt its products for the market. Although My.com will be focused on the US, the apps will be available in English across the world, so he hopes they will be used everywhere.
Mr Grishin laughed off the idea that Mr Snowden, who is exiled in Russia and is reportedly working for an internet company, was helping develop the products.
He said: “There was a lot of noise and all the Russian internet companies said he was not working for them – we said, and Yandex said . . . We try to hire the best programmers and we think if he was interested in working in our company our question would be: how good is he at programming?”
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