Spotify, one of the biggest online music streaming services in the world, has canceled its launch in Russia, citing economic hardships and the new draconian Internet legislation.
The Sweden-based music streaming service, currently serving over 60 million users, had initially planned to launch in Russia in October 2014, but postponed the launch until the beginning of 2015 after it failed to reach an agreement with local mobile providers.
Spotify is bowing out of Russia “for [the] foreseeable future,” according to an RBC report that quotes Alexander Kubaneishvili, the former Google executive who was hired to head the Russian Spotify office. In a letter to partners, he said the reasons for Spotify's change of course were “the economic crisis, the political situation, and the new laws governing the Internet.” Kubaneishvili himself would also be leaving the company, he wrote.
Although most news outlets covering the story point to the worsening economic conditions in Russia, Spotify, like other Internet companies, has much to fear from the new data localization law, which requires Internet businesses to store the personal data of Russian users within the country’s borders. As a cloud-based service, Spotify simply cannot work the way the Russian authorities expect it to, so that “Russians’ data is stored in Russia and Swedes’ data is stored in Sweden,” a source within the company explained to RBC.
Spotify is the latest in a series of international companies who have scaled back their plans for Russia amid the growing economic crisis and a political standoff with the West. In December 2014 Google said it was closing its engineering headquarters in Russia in response to the data storage law, and in January 2015 Intel shut down its Russian-language developers forums, shielding itself from noncompliance with Russia's controversial blogger law.