Inside Russia’s plans to create a local “Xbox” and other tech isolated from the West

From producing local gaming consoles to creating Russian Wikipedia, Russia has tried quite a few local tech projects since the beginning of its invasion of Ukraine, many of which have failed. The war and the consecutive Western sanctions have certainly impeded those efforts.

According to experts, the country has managed to offset some losses, yet the actual situation in the tech sector and the country's capabilities remains unclear since it’s difficult to find alternative sources of statistics to those provided by the Kremlin.

Attempts to create an isolated tech industry

Last month, the President of the Russian Federation, Vladimir Putin, instructed the government to oversee the production of stationary and portable game consoles in Russia by June 15th, as reported by the local website Kommersant. According to sources cited in the newspaper, the project would be developed by VK Group, the owner of the Russian version of Facebook, called VK.

In addition to game consoles, there was also a plan to create an operating system and a cloud system that would be used to deliver games and programs.

Even local Russian experts quoted by the website had stated that the country had no competence to produce them. Creating competitors to Western counterparts would take up to ten years, and even then, the consoles would significantly lag behind those sold in Western countries.

It wasn’t the first time that Russia expressed ambitions to develop its own gaming sector, which was hit particularly hard after the invasion of Ukraine, with many companies and talented IT professionals leaving the country. In 2022, local company Rostec was planning to create its own game engine, which developers would be used as a framework by developers. Based on the lack of news about the project, it seems that it wasn’t completed or even started.

These were just a few of many examples of how the Russian government has tried to create a domestic tech industry isolated from the West. Since 2019, Kremlin officials have been pushing the idea of its own “sovereign internet.” However, the few times it was tested, something didn’t go according to plan.

In 2022, Russia wanted to create its own version of Wikipedia, portraying a distorted picture of reality where there were no mentions of war in Ukraine. Shortly after the launch, the website went down.

This January, another version of Wikipedia, called Ruwiki, was launched. According to its founder, Vladimir Medeyk, it should focus on “balanced, accurate information.”

Russia has also created its own version of ChatGPT called Gigachat, which was created by Sberbank, the largest Russian banking institution. This year, the Prime Minister of the country, Mikhail Mishustin, when comparing ChatGPT to Gigachat, said that the “brains" of the two neural networks contain different pictures of the world" and have a different understanding of what is good and bad, as reported by Kommersant.

Degradation of opportunities

US national security lawyer and geopolitical analyst Irina Tsukerman told Cybernews that Russia is increasingly cut off from the international community on many fronts – losing access to the global tech industry, research, funding, scientific exchanges, and critical components, such as semiconductors.

“The country has been able to recoup some of these losses through partnerships with non-Western countries and by taking advantage of the lax export-import control, but, with "Russia's Google," the famed search engine Yandex N.V. fragmenting over time and finally declaring that it would cease operations, Russia has backed itself into a corner on tech development and effective communications,” she says.

According to the analyst, before the war, the tech sector was one of the few industries in which Russians felt they could succeed on merit rather than on connections. However, the Kremlin’s tightening control over the internet has led to a degradation of opportunities as well as state interference and the growth of nepotism with protection-based corruption.

When asked what overly ambitious plans, such as creating Russian consoles in 3 months, say about the country, Tsukerman states that unrealistic technical projects amount to nothing more than bravado aimed more at domestic audiences than at the international community.

“There is another element to the picture, which is the complete detachment of Putin and some of his top officials from reality. The more authoritarian a regime is, the more mid level officials try to please and flatter, and so they present aspirational pictures that are not at all in line with what is actually deliverable just to impress the authorities,” says the analyst.

Established partnerships with China

According to Demetrius Floudas, Professor at Immanuel Kant Baltic Federal University in Russia and Academic at Cambridge, in spite of initial gloomy forecasts of a catastrophe, the war in Ukraine has not been that disastrous.

“For the Russian IT sector, the Ukraine War has been quite troublesome in the short term and probably serendipitous in the medium term. The longer-term consequences are much

harder to gauge – the conflict may signify a significant rejuvenation factor or a watershed of stagnation – but the answer will depend on too many external parameters,” he says.

The expert believes the mass exit of Western tech conglomerates in 2022 was a stimulus for Russian companies to develop their own solutions and served as a catalyst for the industry to focus inwardly and accelerate it.

According to Floudas, it allowed them to reclaim the domestic market and make inroads into developing countries.

“Russia is currently partnering with China in big R&D projects, which might help create a basis for a ‘Western-independent’ IT industry in the future. Removal of all competition, the creation of a closed-circuit market, and the establishment of new international partnerships with China and India could become a transformative moment for the IT sector in the country,” he claims.

Are the Russians coming back?

It’s challenging to accurately estimate the real impact of the war on the Russian tech industry, as there are not many alternative sources available to that of the Russian government.

It was estimated that after the invasion of Ukraine, around 1000 companies and 10 percent of Russia’s technology employees left the country. The Russian government says that two-thirds of the workers who fled the country after the war have already returned.

Floudas believes that the data effectively illustrates the situation. He stresses that after the war, those who left were overwhelmingly younger, single freelancers, and some employees of large Western corporations who were obliged to withdraw.

“The single biggest factor for emigration in 2022 was uncertainty about Russia’s future and perceived personal danger. Two years down the line, there is much less unpredictability,” he says.

According to the expert, tech personnel have been placated by the Kremlin’s offer of new benefits to stay or return, including deferments from military service, lower income tax, privileged mortgages, and additional research funding.

“Thus, the two main emigration drivers have been addressed. Notwithstanding the effusive glamourization of the lifestyle of digital nomads by the media, spending one’s existence in self-imposed exile is quite senseless if one is not personally persecuted. Therefore, the return of these two-thirds is quite credible, and we could expect more to repatriate eventually,” says D. Floudas.

Tsukerman has a different opinion. According to her, one shouldn’t trust the data of the local government because its main purpose is to be in line with what the Kremlin wants to hear and believe and wishes to project on the population.

The analyst believes that, in reality, very few tech workers have returned to Russia, as the conditions in the country are getting worse than what prompted them to leave, while some may fear punishment for having fled.

“Authoritarian regimes have a way of recruiting foreign workers to work long-distance for them even as their own labourers are fleeing en masse, but of course, Russia cannot admit that it has to rely on foreign talent to carry out even basic tasks because that would be an embarrassing admission of failure,” says Tsukerman.

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