Small businesses in Russia are experiencing a genuine crisis due to the increasing restrictions imposed by the government on the internet. Entrepreneur Natalia Kokovinitz, who runs a dog clothing brand, has had to switch messaging apps multiple times to stay in touch with her customers. These restrictions are part of a broader campaign by the Kremlin to control the digital space in the country.
Despite government efforts to limit the use of messaging apps, Telegram remains a prominent communication tool, serving as the sole sales channel for Kokovinitz's brand since the restrictions on Instagram in 2022 and WhatsApp last February.
Current Challenges Faced by Entrepreneurs
Kokovinitz states, "Telegram is everything when it comes to communicating with customers," noting that the current restrictions make it difficult to track incoming orders. The app does not function well without using a VPN, and notifications are often delayed.
According to the Russian news agency Interfax, around 2.9 million small and medium-sized enterprises and 14.1 million self-employed individuals use messaging apps for business purposes. However, the Kremlin announced this week that it would not compensate businesses for losses incurred due to the internet shutdown in Moscow, which lasted several days in March.
Background & Context
Historically, Russia has seen repeated attempts to control information, with President Vladimir Putin considering these restrictions necessary for the country's security. Nevertheless, these policies face rare resistance from the business elite, as more than two-thirds of Russians believe these restrictions have made their lives more difficult, according to a survey conducted by the independent Levada Foundation.
It is worth noting that restaurants and other businesses have also been severely affected. For instance, the Skrybka restaurant faced difficulties in processing online orders due to a malfunction related to the restrictions, leading to a loss of the restaurant's reputation.
Impact & Consequences
There are no official data on the economic impact of the internet restrictions, but estimates suggest that goods and services sold through digital platforms could reach a value of 11.5 trillion rubles (approximately $153.74 billion) by 2025, reflecting the importance of the digital space in the Russian economy.
Anton Belykh, who runs a real estate company in Moscow, states that the restrictions create a lot of inconvenience, as customers lose revenue, and communication becomes more challenging, resulting in losses for both parties.
Regional Significance
This situation highlights the challenges faced by small businesses under government restrictions, which could have broader implications for the digital economy. As communication channels become increasingly limited, the ability of these businesses to thrive is jeopardized.
In conclusion, the ongoing internet restrictions in Russia pose significant challenges for small businesses, impacting their operations and overall economic contributions. The future of these enterprises remains uncertain as they navigate this restrictive environment.