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Russia’s likely ‘YouTube killer’ The young man tapped to develop VK’s video platforms owes his powerful position to family connections and tireless lobbying, a new investigation shows

Source: The Bell

In September 2023, the Russian technology company VK announced that it was creating two business groups within its corporate structure: one to house the email service, the Rustore app store, VK ID, and VK Pay, while the other division would be home to the social networks Vkontakte and Odnoklassniki and the platforms Zen, VK Video, VK Music, VK Clips, and VK Messenger. The latter group housing all the company’s “content projects” has been placed under the supervision of 29-year-old Stepan Kovalchuk, who is the grandson of Kurchatov Institute President Mikhail Kovalchuk and the grandnephew of banking oligarch Yuri Kovalchuk. A new investigation from The Bell reveals how Stepan rose so quickly at VK to find himself developing what could be Russia’s domestic replacement for YouTube.

In an investigative report published Tuesday about Stepan Kovalchuk, journalists at The Bell note that his career in social media began in 2016 with a project funded by the investment firm National Media Group, which relative and banking tycoon Yuri Kovalchuk controls. The project’s goal was to orchestrate “flashmobs” on Vkontakte and Odnoklassniki where users shared “positive content about overcoming challenges.”

The project partnered with the national television network Channel One, but there’s a dispute about who came up with the flashmob idea in the first place. Some at Channel One credit composer and producer Igor Matvienko with conceiving and launching the project, but the son of political strategist Efim Ostrovsky claimed in 2020 that it was actually his father’s wife who concocted the idea “at the request of the very influential Kovalchuk family in order to get Stepan Kovalchuk out of soccer for good.” But Stepan never devoted much attention to the work, says Ostrovsky: “He bought himself a red Porsche and chased after girls.”

One source told The Bell that Stepan was brought onto the project at the request of his father, National Media Group head Kirill Kovalchuk, so that the young man (then 22 years old) gained experience working with social media. Besides Channel One, sponsors included other subsidiaries of the Kovalchuk empire, such as the tabloid Life and the newspapers Izvestia, Metro, and Komsomolskaya Pravda.

Stepan Kovalchuk started working at VK in 2017, but it’s unclear what he actually did in this period, and the company hasn’t clarified. Sources who spoke to The Bell described continued interventions from his family, who labored to ensure his professional advancement. One former VK executive said relatives even directly approached then-CEO Boris Dobrodeev, the son of the VGTRK media conglomerate general director Oleg Dobrodeev.

Stepan Kovalchuk was made a vice president at VK in December 2018. Sources told The Bell that he managed his own projects in this role, such as the show “Nochnoi Kontakt” (Night Contact), which was meant to compete with comedian Ivan Urgant’s late-night talk show. Kovalchuk was also apparently responsible for promoting news pegs that mattered to the Kremlin’s domestic policy team. But Stepan Kovalchuk didn’t exercise any real power or have access to serious funding until VK’s shareholder shakeup, says The Bell.

In December 2021, billionaire Alisher Usmanov sold his controlling stake in VK to a business empire owned by the brothers Yuri and Mikhail Kovalchuk. The company’s new CEO became Vladimir Kiriyenko, whose father (Vladimir Putin’s domestic policy czar, Sergey Kiriyenko) has a long-standing association with the Kovalchuks. In February 2022, Kiriyenko Jr. appointed Stepan Kovalchuk as the senior vice president for VK’s media strategy and service development.

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When VK divided its businesses into two groups in September 2023, Stepan Kovalchuk became the head of social networks. Two sources in the company told The Bell that Vkontakte’s content policy under Stepan has prioritized bloggers, celebrities, and exclusive content. As part of this strategy, the company has poached stars from YouTube and Tiktok, and in December 2022, Vkontakte bought the studio Medium Quality, which produces the popular show “What Happened Next.” After the acquisition, the show (including its archives) disappeared entirely from YouTube.

“VK is willing to pay hundreds of millions of rubles for certain content. The fees for some bloggers would be enough to license half of the Universal Studios catalog,” one industry insider told The Bell. “But none of VK’s acquisitions has brought any kind of sequel capable of blowing up the market.”

The Bell notes that VK could play a major role if the Russian authorities decide to block YouTube, which the absence of a domestic alternative has apparently prevented.

VK itself is “more than serious” about serving as Russia’s “YouTube killer,” says The Bell. Over the past two years, while divesting from marginal assets, the company has been actively developing its Clips short video service, and it created a separate platform called VK Video. A source in the federal government told The Bell that the Kremlin is monitoring this progress closely and “betting on VK.”

At the same time, one source told The Bell that Russia’s government censor won’t likely block YouTube before the March 2024 presidential election, giving VK more time to “prepare thoroughly.”

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