As Facebook celebrates its 10th anniversary, Russia Direct analyzes the challenges the company faces in Russia.

Prime Minister Dmitry Medvedev (R) and Facebook founder Mark Zuckerberg in Moscow. Photo: ITAR-TASS

On February 4, 2014 Facebook, the most popular social network in the world turns 10 years old. With 1.23 billion users around the world, the company is worth $150 billion, a global record for an internet company.

Despite dominating markets all over the world, however, Facebook is visibly less popular in Russia than local social media. So why exactly has Facebook been unable to replicate its stunning successes in Russia, and what are the challenges it faces in expanding its market share?

The global social networking boom began in 2003 with the launch of MySpace and LinkedIn, followed by Facebook in 2004. Russia caught the social media bug itself two years later in 2006, when homegrown online networks as Odnoklassniki and Vkontakte first appeared – well before any of the U.S. social networks were on most Russians’ radar.

In 2008, by now keen to make inroads into the Russian market, Facebook introduced a Russian interface. Russia was to serve as a test case for Facebook, which sought to raise its profile in countries that are important commercially but have a heavily regulated media landscape. According to Facebook founder and CEO Mark Zuckerberg, Russia was supposed to be the starting point for an eastern drive that would eventually expand the company’s presence in the Chinese market, which is the largest in the world in terms of internet users.

Perhaps unsurprisingly, Russia is now Europe’s largest internet market, with a total of 78 million citizens online. However, Russians are also the most socially engaged internet users in Europe, with 82 percent of Russians having an account on at least one social network, according to the latest statistics from WCIOM public opinion poll. Russians spend an average of 12.8 hours per month on social networks - the world record; the global average is 5.7 hours.

But Russian social media space is unique in terms of its language, culture, user preferences and government regulations. The Russian market is dominated by local players - for example, Google, which leads most Western markets, trails Yandex, a Russian search engine. Vkontakte is the leader among social media, with 30 million users, followed by Odnoklassniki, with 28 million (versus 9 million on Facebook, according to Amarena Corp). Vkontakte and Facebook are popular among the younger generation, while is the destination of choice for older users.

Since Facebook introduced its Russian interface, it has been rapidly gaining Russian users and traffic. From January to August 2010, its Russian audience increased by up to 376 percent, reaching 4.5 million. Russian Facebook users are primarily Moscow-based IT, PR, marketing and media professionals for whom the network is a way of keeping in touch with international friends. But this is a rather a narrow group, and despite this progress, Facebook has now reached a plateau. It also still lags behind its Russian competitors in time spent on the site, with its users spending an average of three minutes on the site daily, compared with average of 20 minutes daily spent by Russians on social media websites in general.

Unlike China, where the site is blocked due to state censorship, Russia imposes no barriers to Facebook’s growth. Its relatively low popularity is a result of competitive market conditions.

Vkontakte, the dominant player on the Russian online market, has a number of features which give it a significant advantage over Facebook. Firstly, it allows its users to watch movies and listen to music for free – something Facebook is not able to do, as much of this content is illegal. In addition, it is possible to upload and download video and audio files via the VK Tracker application. Not only do these features continue to attract new members to the site, they also encourage users to spend more time online. Many users keep Vkontakte on in the background during their internet sessions, listening to streaming music.

This situation is unlikely to change even in the event of a successful conclusion to the campaign against pirate content that began in Russia after its accession to the WTO in 2012. Most Russians are highly likely to remain loyal to Vkontakte due to user inertia and its easy and user-friendly features as a communication tool.

Facebook’s key advantage in this contest is global outreach. Though the interface and applications of Vkontakte are very similar to those of its rival, meaning both offer convenient platforms for social interaction, Vkontakte is used primarily by a Russian-speaking audience and, though it may develop into a strong Eurasian presence, is unlikely to become global. So in this respect Facebook will retain users interested in maintaining global connections.

But there are also political conditions shaping Facebook’s future in Russia. The country is no China, but in Russia, which promotes the idea of a ‘sovereign’ or ‘independent’ internet, U.S.-based social media is seen by some as a potential threat to cultural integrity and regime stability.

Therefore in Russia cyberspace and social media are seen as a matter of national security. Russia’s state policy on international information security until 2020, adopted in 2013, mentions “interference into the internal politics of sovereign states, disturbing the peace and public order” … with IT technologies. In the light of the events of the Arab Spring, labelled by some media as the “Twitter Revolution’ or “Facebook Revolution”, the implication is that social media are being treated as possible coordinating platforms for social uprisings.

Former NSA contractor and CIA agent Edward Snowden’s revelations that major internet companies cooperated with the U.S. government to carry out widespread data mining and surveillance have only increased concerns among Russian authorities about the possible use of Facebook as a tool for exerting foreign influence on Russia’s internet users.

But Facebook seems interested in keeping its position on the Russian market and has proved to be ready to cooperate with Russian officials and business, thus overcoming potential political barriers. In 2012, Zuckerberg visited Moscow for a meeting with Prime Minister Dmitry Medvedev, at which, among other things, political aspects of Facebook activity were discussed.

However, in September 2013, Russia’s telecommunications regulator Roskomnadzor accused Facebook of advertising smoking blends which caused an effect similar to that of illegal drugs and threatened to block Facebook in Russia. Facebook complied in withdrawing this content and the social network escaped further action. On an earlier occasion Facebook had agreed to remove content related to suicide from its site.

Facebook also has agreed to share its users’ public data with Yandex. The deal gives Yandex full access to public data from users in Russia, Turkey and the CIS countries, including Ukraine, Belarus and Kazakhstan.

While further progress represents a challenge, Facebook is likely to keep hold of its niche on the Russian market – a young, urban audience interested in communicating with friends and acquaintances abroad. All else aside, the Russian government has a vested interest in allowing the country’s young professionals, including scientists and IT specialists, to stay in touch with their peers abroad, thus exchanging experience and maintaining not only personal, but also professional ties which could serve Russia well in the future.