Why Yuri Milner Doesn't Want You To Know About His Business

On February 11, 2011, I wrote an article for my former Forbes.com blog "Facebook Investor Leads New Russian Internet Police". It was based in part upon an article published by reputable Russian news portal InFox.ru entitled"Yuri Milner Will Clean Up The Internet" (a translated version can be found at the end of this post). The fact that Yuriy Milner personally called Forbes San Francisco Bureau Chief Eric Savitz to complain about my article and had his lawyer send a letter to Lewis Dvorkin and Tom Post threatening to sue if Forbes didn't kill it (which Eric did post-haste) underscored for me that Milner didn't want anyone outside of Russia to know of  his work for the Russian government.


I can understand Yuriy's reluctance at having that information known in the West. After all, this is where his company DST-Global is making huge profits from their investments in Facebook, Groupon, Zynga, and many other social networking companies. It's also where people hate to hear about government monitoring of the Internet. Then to find out that the CEO of DST-Global, the single largest corporate investor in Facebook, is helping the Russian government identify individuals of interest through an online investigation might complicate things for he and his partners, especially now as they launch DST Global 2, and open it to Western investors.

Here are the facts on Milner's role, as well as the role of Directorate K which I pulled from my company's weekly intelligence briefing archives.

Milner volunteered for the job according to Alexander Zharov: Deputy Minister of Communication and Mass Media of the Russian Federation:

"The ministry of communicationa and information has charged the president of Digital Sky Technologies Yuri Miller with the task to analyze the scale of distribution of illegal content in the Russian segment of the Internet and to define Internet resources that support or distribute illegal content on the web." (human translation of the InFox.ru article referenced above)


What is the MVD and Directorate K
The Directorate for Combating Crimes in the High Technology Sphere (Directorate K) of the Russian Federation Ministry of Internal Affairs (MVD RF) investigates cyber crimes and other illegal activity related to information technology in Russia.  Directorate K works closely with Russia’s Federal Security Service (FSB)—the lead agency for information security—and with foreign law enforcement agencies.  However, Directorate K—like MVD Center E and the FSB—also works to suppress domestic dissent.

Directorate K’s current head is Lt. Gen. Boris Miroshnikov.  General Miroshnikov maintains a high profile speaking frequently to domestic and foreign press on cyber crime.  General Miroshnikov travels frequently, attending foreign conference on cyber crime and meeting with foreign law enforcement officials.  Prior to heading Directorate K, General Miroshnikov headed the FSB Information Security Center after serving as deputy head of FSB Counterintelligence Operations.


Directorate K Cooperation with the FSB
Russian Law assigns the Federal Security Service (FSB) the lead role for ensuring Russia’s information security.  The FSB also has broad authority against crime, especially organized crime, and also cooperates with international law enforcement.  Potential conflicts, however, appear minimal since the FSB is clearly the senior partner.  The FSB runs the overall system for internet monitoring and Russian press frequently mentions FSB and MVD cooperation in criminal investigations.  The news section of the MVD website stresses Directorate K successes against credit card fraud, phone fraud, child pornography, and other fairly routine criminal activity.

Russian press, however, shows Directorate K working with the FSB, and MVD Center E, to suppress domestic political dissent.  In December 2007, Novaya Gazeta wrote that major Russian hosting service Masterhost blocked access to opposition websites after receiving a letter from Directorate K.  Sergey Kopylov, head of Masterhost’s; legal department confirmed receiving a letter from the MVD about suspending service.  Novaya Gazeta wrote to Directorate K’s press service—normally eager to place stories concerning Directorate K activity—without receiving a reply.  Leaders of opposition parties also detailed denial of service attacks on their websites and disruptions in cell phone service.  Opposition leaders complained that the authorities displayed little interest in their problems and stated they would probably move internet activity to foreign servers.  In March 2010, Solidarity member Olga Kurnosova told Ekho Moskvy Radio that Directorate K shut down the 20 March website as extremist.  According to Ms. Kurnosova, opposition activists used the site for communication and coordination of protests.

Russian officials are concerned that opposition forces will move internet activity aboard, using social networking sites to coordinate their activity.  In fact, Deputy Minister of Information Technologies and Communications Dmitriy Milovantsev told Dagestanskaya Pravda in 2005 that this acted as a brake on government actions despite concern over opposition domestic internet activity.

Since 2005, major Russian social networking sites VKontakte and Odnoklassniki have come under financial control of pro-Kremlin oligarchs including DST Global’s Yuriy Milner.  According to Moscow Vedomosti Online, in November 2010 Russian social networking activity was shifting to Facebook and Twitter.  As a result, Russian telecommunication companies MTS and Vympelkom reached agreement with Facebook and provide free Facebook access for their subscribers.  Facebook, with Russia’s DST Global owning approximately 10 percent of Facebook, anticipates continued strong growth in Russia and is developing a Russian interface.  Some analysts anticipate a strategic merger between Milner’s VKontakte and Facebook.  The Russian search engine Yandex is also indexing Facebook internal pages.

Taia Global analysts estimate that the growing linkages between Russian companies and Facebook help the FSB and MVD Directorate K prevent possible opposition groups from using Facebook as an organizing mechanism for political dissent.  The FSB can easily monitor internet activity originating in Russia since all outbound traffic passes through gateways controlled by government entities.  MVD Directorate K can exercise authority over Russian telecommunications companies instructing them to cutoff access so embarrassing photos and videos do not appear during internal disturbances.  Day to day monitoring allows both the FSB and MVD Directorate K to identify possible “extremists” for inclusion in MVD Center E’s extremist database.

Security Impact For Facebook Users
Any future merger between VKontakte and Facebook could expand Russian monitoring capabilities dramatically.  Any merger would probably include technical connections between the two networks.  By law, Russian companies are required to cooperate with the FSB if asked.  This also applies to U.S. companies doing business in Russia, like Facebook Russia (who is mentioned in the InFox article). The FSB could manipulate, if not actually direct, the connection to facilitate FSB objectives.  Given Yuriy Milner’s close connections to the current government, cooperation would probably occur quietly.  Taia Global analysts estimate that Russian government objective of preventing the political opposition from using media to organize dissent, especially during a domestic crisis, is one reason for DST Global’s investment in Facebook.

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A translated version of the Infox.ru article "Yuri Milner Will Clean Up The Internet" follows after the cut.

Yuri Milner will clean up the Internet (13 May 2010, Infox.ru)

The ministry of communication and information has chosen the curator
of content projects in the Russian segment of the Internet. Monitor
internet ressources as for the legality of their content will Yury
Milner, whose DST foundation owns shares in "Odnoklassniki" and
"Vkontakte".

The ministry of communicationa and information has charged the
president of Digital Sky Technologies Yuri Miller with the task to
analyze the scale of distribution of illegal content in the Russian
segment of the Internet and to define Internet-ressources that support
or distribute illegal content on the web. The deputy minister
Alexander Zharov told infox.ru that an analytical report about the
conditions of functioning of these ressourses and their "influence on
the situation in the sector" will be presented in the ministry in the
fall of 2010.

A source close to the ministry has specified that this task was given
to Yury Milner as a result of the session of the Council for Internet
and new mass-media of the ministry in November 2009. The businessmen
was proposed to to present a report on the economic consequences of
illegal activity in the beginning of 2010.

According to the deputy minister Alexander Zharov the delay in the
preparation of the report is due to the complexity of this task.

<<He (Yury Milner. - Infox.ru) has not yet fully finished this work.
Loads of information has to worked through. And the content is
constantly updated, therefore he is still in process. I wait for the
report in August-September>>, - Alexander Zharov has told.

Yury Milner is the coowner of the company Digital Sky Technologies,
which owns ICQ and shares in Mail.ru, as well as social networks
Vkontakte.ru, Odnoklassniki.ru, Facebook and others.

An official representative of DST Leonid Solovev has commented on the
situation as following: <<In November 2009 at the session of the
Council for Internet and new mass-media of the Ministry of
communication and information Yury Milner has suggested to generalize
the position of the largest Internet companies of Russia concerning
the distribution of an illegal content in the Russian segment of the
Internet and to present it at the next session of Council>>. That means
that Milner will present a certain uniform position of the largest
Russian Internet companies on this question, but it does in no way
mean that he was charged with the task to <<to analyse the scales of
distribution of illegal content in the Russian Internet and to define
Internet resources supporting or distributing illegal content on the
web>>.

According to reports of the "K" department of the Russian ministry of
internal affairs in 2009 on the pages of Vkontakte.ru was discovered
more than half of the child pornography available on the Russian
segment of the Internet. "Because of this the problem was fixed fast,
- said the head of the press-service of the social network Vladislav
Tsypluhin. - Vkontakte.ru is now develloping a programm for the fight
against child pornograpy - we support financially child charity
organisations and they provide us with volunteers who search and
delete this kind of content. We give them the rights to delete videos
and other kind of content. And of course we monitor what they do".

Lawyers of the social network deal with pirated content on the social
network says the representative of Vkontakte.ru "The license owners
send official requests with the prove of their rights and then we
remove the content from the side, expains Vladislav Tsypluhin.
"Facebook has its own algorithms to find this kind of content and a
team of moderators who work on this", - adds the head of
representation of Facebook in Russia Ekaterina Skorobogatova.

Alexander Zharov said that "when this topic came up Yury Milner
volunteered to head the process". "I think that he as any responsible
businessman wants the share of illegal content to come down to zero",
- adds Alexander Zharov.

One of the Council for Internet and new mass-media thinks that
independent analytics should be included in the expertise of the
content "to exclude conflict of interests". "It is naiv to think that
owners of social networks want to fill them with illegal content. We
work a lot to categorize it and exclude it and get clean from it", -
responds a top-manager of another popular social network who is not
part of DST.

According to one member of the Council to charge officials with the
monitoring of the market of illegal content would not bring the needed
results. "The work would take to long, and I doubt that companies
would provide the oficial with confidential information. He would have
only data from open sources", - said the souce of Infox.ru

"A person who knows the work of a social network and other services
from within will bring much more results than an oficial who is far
from the Internet", - agrees the CEO of the social network mamba.ru
Andrey Bronetsky. He says that the existing laws do not allow to
absolutely exclude illegal content and a new document is needed which
would make the cooperation between the management of social networks
and law inforcement authorities more effective.