Vladimir Putin’s internet czar warns web giants 'are milking it'

When he’s not checking Gmail on his MacBook, Vladimir Putin’s new internet czar can’t stop railing against American technology companies.

Google, Apple, and Microsoft — collectively worth more than Russia’s GDP, have all entered German Klimenko’s crosshairs since he was named Mr Putin’s first internet adviser six weeks ago.

In a 90-minute interview peppered with expletives, Mr Klimenko said forcing Google and Apple to pay more taxes and banning Microsoft Windows from government computers is necessary.

“We are breeding the cow and they are milking it,” Mr Klimenko said at the Moscow headquarters of his internet group, which includes blog-hosting and statistics services.

Mr Klimenko, 49, is pushing to raise taxes on US companies to help level the playing field for Russian competitors such as Yandex and Mail.ru.

His efforts mirror those of governments across Europe and beyond to squeeze more revenue out of Google, Apple, and other multinationals with increasingly complex billing and ownership structures.

He already has an ally in parliament: Andrey Lugovoi, one of two former KGB officers accused by a UK judge of assassinating former agent Alexander Litvinenko, a vocal Putin critic, in London in 2006.

Mr Lugovoi, who became a lawmaker after Litvinenko’s poisoning and denies wrongdoing, is sponsoring a bill that would apply an 18% value-added tax to as much as 300bn rubles (€3.4bn) of revenue that the likes of Google and Apple earn each year.

The bill lists a dozen categories of digital products and services on which domestic companies pay Vat but foreigners, for the most part, don’t, including games, movies, marketplace transactions, and cloud computing.

“When you buy an app from Google Play or the App Store anywhere in Europe, Vat is charged at the place of payment, but not here in our banana republic,” said Mr Klimenko.

The proposed amendment to the tax code is one of scores being debated by lawmakers seeking new sources of revenue to plug the biggest fiscal deficit in six years. Plunging oil prices and sanctions over Ukraine have helped prolong the worst recession since Mr Putin came to power in 2000.

But the Kremlin’s issues with Silicon Valley go deeper than finances.

In a country where the president has called the internet a ‘CIA project’, suspicion runs deep that US companies do the bidding of their government as much as their shareholders.

Google, for example, which can track “everything”, responds to 32,000 requests a year from US law-enforcement agencies but will not answer one from Russia, says Mr Klimenko.

“We have to consider this as a kind of potential threat to our national security,” he said.


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