Durov’s dismissal signals further pressure on Russian online businesses

pavel-durovPavel Durov, the co-founder of Vkontakte, the Russian version of Facebook, was recently fired as CEO of the company in the latest in a string of attempts to stamp out criticism of the Putin regime.

Durov, who just recently obtained citizenship of St. Kitts and Nevis and has left Russia indefinitely, had presented himself recently as a champion of free speech for refusing to provide information to the FSB (the Russian state security apparatus) about protesters who took to the streets in Ukraine in opposition to former Ukrainian president Viktor Yanukovych. His presence at the company has apparently proved too problematic for its shareholders and, after a number of attempts to erode his influence within the firm, he has been forced out and left Russia as a result.

The company, which was founded by Pavel and his brother Nikolai in 2006, has become the most popular social-network in Russia, reaching nearly 50 million unique monthly users as of July 2013. However, the company’s popularity and potential as a tool for organizing protests against the government has not gone unnoticed by the authorities. In April 2013, 48% of shares in the business were acquired by United Capital Partners president Ilya Sherbovich from VK co-founders Vyacheslav Mirilashvili and Lev Leviev.

It was not a simple acquisition deal, however, as the move was reportedly in response to Durov’s refusal to deactivate the accounts of individuals calling for protests after Russia’s allegedly fraudulent parliamentary elections in December 2011. That particular acquisition made headlines because, together with the 40% held by Mail.ru, a company owned by billionaire Alisher Usmanov (Russia’s richest man), Durov was left with only 12% of shares in the social-network.

More significantly, the deal made Sherbovich, a board member of state-owned Rosneft, the largest shareholder in the company and threatened Durov’s position. Still, Durov remained as CEO and retained voting rights on the 40% of shares owned by Mail.ru. Then, a few months ago, Durov’s status at the company further weakened when he sold his remaining stake to Ivan Tavrin, a reported ally of Usmanov, as a result from further state pressure.

What happened to VK in less than a year’s time painted a picture of a coordinated effort. Before being completely removed from his own company, Durov, maybe in an early acceptance of the de facto dismissal, had already begun working on a new project with his brother, a secure messaging service called Telegram, with his brother and now says that he intends to develop a new social network.

Having declared that he has no intention of returning to Russia, he asserted his strong belief that those who intend to build online businesses there should know that the government will assert its influence if it perceives a threat. Durov has likely already made a fortune through the business, so he will now be free to indulge in other pursuits abroad. However, this is a chilling episode for prospective Russian entrepreneurs and will place Vkontakte under even closer state watch.

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