Twitter Inc had to navigate a minefield of regulations and geopolitical issues as it grew, but those problems aren’t going to stop once the firm reaches a certain size threshold. The government of Russia ordered on Wednesday that data from Russian Twitter users be kept in the country. That’s a difficult problem for Twitter, and a change in policy in the Eastern European country.
Roskomnadzor, the country’s data regulator, brought the order against Twitter. The body previously charged Facebook Inc with the same responsibility, but it’s not clear if the Menlo Park firm intends to comply.
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The data body’s chief Alexander Zharovtold the Financial Times that “They changed their user agreement some months ago. And if you read that, people must provide a set of metadata, which in our understanding as a whole counts as personal data and [makes it possible] to identify an individual.”
Previously the agency said it did not believe that Twitter stored personal data, making it exempt from the rules around the data of Russian citizens. That opinion has now changed, and the state is asking the firm to comply with the same sort of rules as Facebook.
Building new data centers in Russia could be costly for both Facebook and Twitter, though it’s likely that the direct cost of the project isn’t what bothers the firms. Giving in to this sort of ruling, especially in a country like Russia that’s not worth all that much in the global ad business, could have damning effects on the future of business at Twitter .
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Privacy is a major concern for the citizens, and governments, of many countries around the world, and Russia isn’t the only state stepping up to the plate. In recent weeks it has become clear that Twitter , Facebook, and other US web giants, might have to defend their positions in Europe.
After a court case was brought against Mark Zuckerberg’s firm a European court ruled that the US could no longer be considered a safe harbor of the data of European citizens. The court did not rule that the data could not be transferred or traded, but simply that it would not be automatically protected by older rules.
Twitter runs on data, and on data centers. If the firm has bounds placed on the way it can move information across the world, it could eat into its already fragile business.
Shares in the firm, which is lead by co-founder Jack Dorsey, sold for $26.51 on Wednesday’s market at close. That’s just above the firm’s IPO price, and well below the $36 or so shares were trading at when Mr. Dorsey took over at the top on July 1.
Twitter has, as evidenced in recent earnings reports, major problems in both increasing user growth and in raising the amount of money it can grab from its user base. For the time being the firm is trying to work on its product in order to improve what people see and make them more likely to spend time on the site.
That problem may seem small, however, if world governments begin to ask for data centers to be built on home turf, and data itself to be closely guarded. Russia’s decision, and the reaction that Facebook and Twitter have to it, should be closely watched on Wall Street.