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Censorship by Litigation in Russia?

Objection? Overruled! Images remixed by Andrey Tselikov.

Objection? Overruled! Images remixed by Andrey Tselikov.

It has been a week of revelations for Pavel Durov, founder and CEO of VKontakte, Russia's largest social network. On April 16, Durov made an announcement that VKontakte will not engage in censorship on behalf of Russian authorities, publicly refusing [Global Voices report] to shut down Alexey Navalny's anti-corruption community on the service. In a later interview [ru] he elaborated that his stunt [Global Voices report] with an April Fools’ Day resignation and subsequent return was engineered to counter pressure he was feeling over this incident.

On the same day Durov also announced that when he sold his 12% share in VKontakte back in January (a share which gave him a controlling stake in the company when combined with the 40% held by billionaire Alisher Usmanov, who entrusted Durov his voting rights), it wasn't precisely for reasons he had given [ru] back then — a saintly desire to rid himself of worldly possessions. Rather, it was because he did not want his stake to be used to pressure him when he refused to provide Russian secret police with information [ru] on Ukrainian opposition Euromaidan groups organizing on VKontakte.

Durov said that complying with such a request would have been a “betrayal” of millions of Ukrainians who had trusted him. He also claimed that Russia has no jurisdiction over Ukrainian users of his website. In an interview [ru] with the New Times on April 17 he said that he has no more possessions that can be used as “leverage” against him — an ironic claim from a man with an estimated worth of over $200 million in 2012. Perhaps what he meant was that he has no possessions that Russian authorities and their proxies can get a hold of. Unfortunately, this assumption could be wrong.

Earlier this month, VKontakte minority shareholder investment fund United Capital Partners (UCP), filed a complaint [ru] against Durov for breach of VKontakte fiduciary duty when he was developing his new brainchild — the secure messenger Telegram. UCP alleges that Durov developed the new service using VKontakte funds and resources, as well as his own time, which harmed VKontakte. UCP also alleges that Telegram is in direct competition against VKontakte, which has also harmed the company. Finally, UCP claims damages of 500 million rubles and wants Telegram and all associated IP to come under VKontakte control by way of restitution.

So far, UCP has gained control of three companies registered in the United States and loosely affiliated with Telegram. Durov explained in an interview [ru] to TJournal that these companies own the rights for the Telegram trademark in the US market. However, actual Telegram infrastructure and IP is controlled by Durov and his brother outside the United States (Durov did not specify where). Durov claims that the complaint is frivolous, and that there are “signs of fraud” in the way that UCP is conducting its business.

UCP is Durov's arch-nemesis. Last year it purchased a 48% stake in VKontakte, and is currently the only true minority shareholder (Alisher Usmanov's Mail.ru group controls the remainder). Durov maintains [ru] that UCP's purchase was conducted in secret and therefore illegally. Recently a subsidiary of Mail.ru group filed its own complaint [ru] against UCP with an arbitrage court. If successful Durov will have a chance to buy back some of his shares, and maybe regain control of the company.

It is uncanny that UCP should start exerting pressure on Durov's other interests, just when he is embroiled in conflict with the authorities over Navalny. Perhaps this is an attempt to use “property as leverage,” now that Durov no longer has a stake in VKontakte. Is Durov's confidence that Telegram is out of bounds for players like UCP genuine? Or has he started speaking publicly against censorship because he needs popular support as a way to defend his intellectual property? Only time will tell.

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