eBay is first Valley giant to comply with Kremlin server law


kremlinThe Kremlin has been tightening the screws on Russia’s once-anarchic Internet space, and Pierre Omidyar’s eBay has reportedly become the first Silicon Valley company to step forward and agree to the Kremlin’s top demand: storing Russian users’ data on servers in Russian territory, where it can be more easily accessed by the state security services.

According to the Russian daily Kommersant, eBay’s head of Russia operations, Vladimir Dolgov, met earlier this month with the deputy head of Roskomnadzor, the Kremlin agency responsible for monitoring and censoring media, and agreed to begin transferring Russian users’ data from its Switzerland servers into Russia proper. (Roskomnadzor is the same Kremlin agency that shut down my defunct satirical Moscow newspaper, “The eXile,” in 2008.)

The Russian newspaper reports that eBay’s PayPal division, which will be spun off this year, also sent a representative to the meeting with Roskomnadzor, and “expressed the same position on this matter as eBay.”

Billionaire publisher Pierre Omidyar, the chairman of eBay, has been critical of government intrusion on personal privacy, and has said that he launched The Intercept and First Look Media inspired by Edward Snowden’s cache of NSA secrets. On the other hand, Omidyar publicly approved of PayPal’s 2010 decision to cut off funding for WikiLeaks in order not to antagonize US government authorities. Omidyar wrote at the time that although he valued the principles of freedom of expression and privacy, “executives have a fiduciary duty to do what’s best for their shareholders.”

Being the first American company to comply with the Kremlin’s law on storing Russian user data in Russia is consistent with Omidyar’s shareholder-first philosophy. Russia represents a one of the largest potential growth markets for eBay, sanctions not withstanding. In the last half of 2014, eBay recorded 3.7 million Russian users. Ebay hasn’t yet announced if it plans to rent Russian servers or build its own on Russian territory. According to iKS Consulting, the Russian data server market grew 28% in 2013, featuring over 170 major data server centers — this before the new law was voted on.

Russia is a key market in eBay’s growth strategy, in spite of western sanctions.

Omidyar’s support for Edward Snowden is something that the Kremlin would look kindly on. Omidyar funds the Freedom of the Press Foundation, whose board members include the former NSA spy living in Russia under Kremlin protection. As we reported in Pando and NSFWCorp, the Kremlin politician who initially took Snowden under his wing in 2013, Ruslan Gattarov, was also the Kremlin’s lead figure pushing for tightening government control over Russia’s Internet.

Omidyar has also been active next door in Ukraine, where Omidyar Network co-funded with the US government the NGOs responsible for organizing the Maidan revolution, which installed a fiercely nationalistic government and sparked an ongoing deadly war with Russia. One of the key figures funded by Omidyar Network, Svitlana Zalishchuk, is now a deputy in Ukraine’s parliament in the party of Ukraine’s billionaire president Petro Poroshenko. Omidyar Network is also a co-funder with the US embassy of a new Ukraine media company, Hromadske TV.

While these may seem like contradictory positions to those looking for a consistent political conspiracy — collaborating with the Kremlin while collaborating with the US government in Ukraine; supporting journalism based on Snowden’s leaks while also supporting a US government crackdown on WikiLeaks and prosecuting the PayPay14 — there is a rather simple explanation, to the extent that Omidyar has a coherent plan: It’s strictly business, Sonny.