BAN, IMPOSSIBLE TO REGULATE?

The tabling of a wide-ranging bill to amend the Code of Administrative Offences at a plenary session of Azerbaijan's Milli Majlis marks a shift in state policy towards foreign IT platforms towards the imposition of strict legal sanctions. The proposed amendments, which are in line with changes to the laws 'On Information, Informatisation and Information Protection' and 'On the Protection of Children from Harmful Information', clearly define the responsibilities of social media platform owners. The proposed changes, which are designed to impose strict regulation on the activities of foreign social media platforms and video-hosting services with age restrictions, necessitate a comprehensive analysis that considers not only the legal implications but also the significant technological and economic consequences. The state's desire to regulate the operations of foreign IT giants and protect underage users is entirely in line with the current global trend. However, the transition from a declaration of intent to practical implementation requires meticulous precision, as it inevitably affects the highly complex, well-established mechanisms of the domestic digital economy and the everyday lives of citizens.

What is digital sovereignty?

Azerbaijan's initiative is not unique; it is a natural continuation of a global process known in international practice as the 'grounding of IT giants'. In the current business climate, a growing number of states worldwide—including the European Union, with its comprehensive Digital Services Act, as well as the US, Türkiye and the countries of Central Asia—have arrived at a shared conclusion. Transnational corporations can no longer operate in a legal grey area, completely disregarding national legislation and the cultural contexts of the regions where they generate profits.

The official position of the relevant authorities in Azerbaijan emphasises that this is not about putting pressure on digital platforms, but solely about ensuring security and transparency. As stated by Rashad Hasanov, Azerbaijan's Deputy Minister of Digital Development and Transport, during public consultations, the proposed law does not aim to shut down social media platforms, but rather to strengthen control over their use. This is in response to statistics which indicate that 43 per cent of parents are unable to fully monitor their children's digital activity. Firudin Gurbanov, Deputy Minister of Science and Education, also confirmed the relevance of the issue, noting that the ministry has already introduced internet filtering in schools. This restricts access to video content on more than two hundred harmful topics, including the blocking of TikTok on school premises.

Therefore, the requirement to open official offices in Baku, establish operational communication channels in the official language and verify users' ages is a legitimate and understandable step by a sovereign state. However, it is precisely at the intersection of fair state requirements and the global technical architecture of the Internet that questions arise requiring the most careful analysis.

The ‘traffic migration effect’

The primary challenge for regulators and platforms alike is the verification of users' actual age. The draft bill proposes a complete ban on account registration for those under the age of sixteen, and the introduction of strict parental consent and supervision requirements for the 16–18 age group. At this stage, domestic experts have raised doubts about the practical feasibility of such a strict threshold. It is important to note that international consensus typically focuses on the protection of children under the age of thirteen. However, in Azerbaijan, many 17-year-olds are already beginning to engage in independent activities and even launch start-ups. This highlights a potential challenge in applying strict parental filters to this age group.

It is evident from global practice that there are currently no effective and safe ways to reliably verify age online without infringing on users' rights. In order to comply with the requirements of national regulators, IT platforms may be required to request scans of identity documents from citizens on a large scale, or introduce biometric facial scanning via international systems. This could result in cross-border data security issues. The mass collection of citizens' confidential information from any country by foreign corporations, whose infrastructure lies outside the local jurisdiction, always carries the risk of uncontrolled data leaks.

Furthermore, experience in the US and Western Europe demonstrates a paradoxical backlash: strict access filters for popular apps do not so much deter teenagers as encourage an explosive growth in the use of VPN services and secure, next-generation encryption protocols. In light of the widespread use of VPNs, government bodies are losing even their existing monitoring capabilities, whilst the load on local internet service providers' networks is rising sharply. Philip Howard, a professor at the Oxford Internet Institute, emphasises that technical measures—such as slowing platform traffic by 20, 50 or 90 per cent in the face of sophisticated circumvention technologies—may prove ineffective against the end user, but will create significant technological strain within the national communications infrastructure.

Economic pragmatism and risks

A second key point to consider is the stance of the transnational companies themselves. Their response to any regulatory requirements is always dictated by strict economic pragmatism and a weighing up of the cost of maintaining a market presence against the cost of losing it. Experts suggest that platforms with a high capacity for adaptation, such as TikTok or Telegram, will quickly reach a compromise, as they already have experience of opening local offices in CIS countries.

The situation is far more complex for American conglomerates such as Meta or Google. For American tech giants, opening a physical branch in smaller regions poses less of a financial risk and more of a legal one in the event of disputes over the moderation of political or social content. The draft law stipulates fines of ₼100,000 or ₼300,000, which are negligible for companies with market capitalisations running into the billions. Therefore, the most probable scenario will be protracted negotiations lasting many months, during which corporations will propose hybrid options for remote engagement via accredited local intermediaries.

At the same time, when discussing the tough measures embedded in the overall reform concept—such as a potential ban on local companies purchasing advertising or the forced degradation of internet traffic in the event of a refusal to register—it is important to shift the focus from Californian offices to Azerbaijan's domestic market. The administrative fines currently under consideration are merely the initial stage of regulation; however, a protracted conflict and a shift towards exerting economic pressure on the platforms will affect the domestic business environment. In recent years, a significant and vibrant ecosystem of small and medium-sized enterprises has emerged in the country, with Instagram and TikTok becoming essential lifeline infrastructure. Many local micro-entrepreneurs, ranging from family-run bakeries to regional tourism start-ups, do not have their own websites or physical retail premises. Their businesses are fully integrated into social media.

The World Bank's regional review on the development of the digital economy in the South Caucasus has repeatedly emphasised that, for developing markets, social media platforms often serve as the primary institutions of inclusive commerce, enabling the self-employed and micro-businesses to reach customers with zero start-up costs. As local experts have highlighted, in the event of restrictions on the operation of these platforms, tech giants would only experience a slight decline in their global revenue, with no significant impact on their market capitalisation. However, for the national business sector, this would have long-term economic consequences.

It is important to note that artificially slowing down the loading of media content will directly impact impulse purchases, as modern consumers instantly leave pages that load slowly. A potential prohibition on official advertising tools may compel local businesses to explore alternative payment schemes through foreign banks. This could lead to an increase in costs and a reduction in the transparency of financial flows within the country. Furthermore, businesses will need to invest significant time and resources in retraining their audience as they transition to alternative platforms. This is because other services currently lack the advanced algorithms necessary for precise targeting and effective product presentation.

In search of a balance

Regulating the digital space is an inevitable stage in the evolution of any modern state in the age of digitalisation. Ensuring the safety of children and maintaining law and order in the online sphere are paramount state priorities. This is further supported by the strong approval from parents regarding the changes. According to official data, 93 per cent of respondents with school-age children approve of the initiative. This statistic was cited during public consultations in the Milli Majlis on a package of draft laws aimed at strengthening the protection of minors in the digital environment.

The nature of the IT sector is such that any regulatory measures have far-reaching and long-lasting repercussions for the real economy. The primary challenge confronting the relevant authorities in Azerbaijan as they implement the new law is to achieve this delicate balance. Control mechanisms must be structured in such a way that, whilst holding foreign corporations to account, they do not create barriers to the development of domestic digital enterprises or drive audiences into an unregulated grey area. In this situation, a diplomatic compromise and a phased technological dialogue with the platforms appear to be the most pragmatic and safe way to maintain the pace of development of the country's non-oil sector.