Many online networking sites store their users' data on servers outside of Russia - often in the United States. Other sites, such as Facebook and Google, continue to store their data outside of Russia.
A Russian court upheld a lower court's decision to block the website of the social networking company LinkedIn.
Thursday's ruling is expected to fundamentally alter the way foreign internet companies operate in Russia by forcing them to either store their vast reservoirs of data on Russian-based servers or shut down.
Roskomnadzor, Russia's communications watchdog, accused LinkedIn of violating a 2014 law that requires websites storing the personal data of Russian citizens to use Russian servers to do so. LinkedIn has more than 6 million registered users in Russia.
Critics say the relatively new law represents the government's latest crackdown on control of the internet.
In August, a Moscow District Court ruled that LinkedIn's site should be blocked, but the decision had not yet been implemented pending the company's appeal.
"The decision of the Tagansky District Court has been upheld, the appeal by LinkedIn Corporation is unsatisfactory," according to Russian news agency Interfax, which quoted the court's decision.
Negotiations still possible
LinkedIn said it still hopes to reach an agreement with the regulator.
"LinkedIn's vision is to create economic opportunity for the entire global workforce," according to a statement. "The Russian court's decision has the potential to deny access to LinkedIn for the millions of members we have in Russia and the companies that use LinkedIn to grow their businesses. We remain interested in a meeting with Roskomnadzor to discuss their data localization request."
As of Thursday afternoon the site was still up and running, but Russia is expected to block the site within the next week.
While some online companies such as Booking.com have said they will transfer the necessary data to Russian servers, it is unclear whether other sites, including Facebook and Google, will comply with the law.
Antitrust body targets Microsoft
Meanwhile, Russia's main antitrust regulator, the Federal Anti-Monopoly Service (FAS), also announced Thursday it is opening a case against Microsoft, which is nearing the completion of a $26 billion acquisition of LinkedIn.
The FAS accused Microsoft of abusing its dominant market position by failing to give enough time to antivirus developers to adapt to the Windows 10 operating system.
The FAS claims that gave an unfair advantage to Microsoft's own Windows Defender, anti-virus software, which is built into the operating system. As a result, that hurt competitors including Russia's Kaspersky Labs, which filed a complaint with the regulator.
"Such actions lead to an unjustified advantage for Microsoft in the program market,” said FAS deputy head Anatoly Golomolzin in a statement. "Our task is to ensure equal conditions for all participants in this market."
bik/kl (Reuters, AP)