Censorship or investor war? That’s a subject of debate in Russia, after a fund managed by a Russian businessman with close ties to the Kremlin acquired 48% of the country’s largest social-networking site, V Kontakte (“in touch”), which is similar to Facebook.
On Wednesday, two of the founding investors in V Kontakte sold their shares to investment fund United Capital Partners. UCP is headed by Ilya Shcherbovich, a board member at the state-owned oil giant Rosneft, which makes him an ally of Russian president Vladimir Putin.
The remaining 52% of the company is controlled Pavel Durov, the 28-year-old founder of V Kontakte. Durov actually owns only 12% of V Kontakte’s shares, but last year, online firm Mail.ru handed him control of its 40% stake of the company’s shares. Mail.ru is controlled by Alisher Usmanov, another Kremlin buddy and Russia’s richest man. It’s unclear if this agreement between Mail.ru and Durov can be reversed, though Durov says his control of the stake doesn’t expire (link in Russian).
While bloggers have reacted by assuming that this is an attempt by the Kremlin to take control of V Kontakte, that’s not immediately clear. Durov and Usmanov were both taken by surprise by the sale, which Durov hinted might be illegal. The network’s young founder has been in the hot seat recently, however. Earlier this year, a newspaper reported that V Kontakte had been conspiring with Russia’s Federal Security Service (FSB) to curtail opposition groups’ use of the site. He vehemently denied those allegations. And this week investigators raided both V Kontakte’s offices and Durov’s home, ostensibly looking for evidence to link him to a traffic accident earlier this month in which a policeman was injured. Durov’s lawyers vehemently deny that he was the culprit.
So it might be an attempt by the Kremlin to exert more control over the social network: 88% of it is now owned by Putin’s friends. (Lev Leviev, one of the founding investors who sold his stake to UCP, is an oligarch who was once close to the Kremlin but may have since fallen out of favor.)
But it could be just a tussle for control of a valuable asset. The sellers had reportedly been trying to find a buyer for a long time, but couldn’t get a good price. And if Usmanov, a Putin ally, is being truthful that the sale caught him by surprise, it might indeed mean that there’s no sinister conspiracy here.
Either way, though, it’s a reminder that V Kontakte, like many Russian media businesses, remains vulnerable. Powerful oligarchs can give a company a financial cushion and friends in high places, but they can also trade away its fate on a whim.