For nearly thirty years, the Russian internet company VK was a poster child for success, weathering the ever-changing business climate and evolving from a free email service to a giant corporation to rival its Western counterparts. Now it is facing its most serious crisis yet. 

That might come as a surprise to many. After all, in recent years, the Kremlin has done everything it possibly could to promote VK and its messaging service Max, from making the installation of VK and Max mandatory on imported smartphones to obliging Russians to use Max and VK to access state services. If that weren’t enough, VK’s competitors, including Telegram and Meta, have been banned in Russia.

Despite this support, the headwinds facing VK are serious—and show no signs of abating. In July 2026, the European Union imposed sanctions on VK (and the VK-linked developers of Max), accusing them of spying on users and facilitating political repression. Not only did this lead to Max being removed from the App Store and Google Play, it raised existential questions about VK’s business model, the viability of the digital ecosystem it has built for the Kremlin, and even the survival of the company itself.

Previously known as Digital Sky Technologies and then Mail.Ru Group, VK is one of Russia’s oldest internet companies. Having started out in the late 1990s as the free email service Mail.ru, by the late 2000s it had transformed itself into a major venture capital investor that listed on the London Stock Exchange. Shortly before the IPO, Alisher Usmanov—a billionaire often linked to President Vladimir Putin’s inner circle—became one of the company’s major shareholders. It was at this point that Mail.Ru Group’s relationship with the Kremlin began to transcend the standard interactions between big business and the state.

Following the IPO, the holding company separated its investment and operational businesses, with Mail.Ru Group focusing on consolidating Russia’s biggest social networks and gaming assets. The company secured full control over the social networks Odnoklassniki and VKontakte and built a major gaming business, My.Games, ultimately becoming one of the country’s largest internet conglomerates. 

By 2022, Mail.Ru Group was at the height of its powers. VKontakte was generating billions of rubles in advertising revenue, while My.Games had nearly a billion users across the world. In partnership with China’s Alibaba, the company was developing the online marketplace AliExpress in Russia, and, with Russia’s biggest bank, Sberbank, it was selling transport services that competed with internet giant Yandex. Mail.Ru Group was profitable, and its revenues saw double-digit growth year after year.

The only fly in the ointment was its cooperation with the Kremlin, which tarnished the company’s reputation. Ahead of the 2018 presidential election, for example, VKontakte and Odnoklassniki promoted “Putin Team,” a group of prominent public figures backing Putin’s reelection. It was around this time that Alexander Kabakov was made vice president of the company. Staff joked that his office was a “department of the presidential administration,” because he managed all mentions of Putin on VKontakte.

At the end of 2021, Usmanov sold VK to companies controlled by Yury Kovalchuk, a fellow billionaire who is friends with Putin. Shortly after, Vladimir Kiriyenko (the son of Kremlin first deputy chief of staff Sergei Kiriyenko) was made head of VK, and Stepan Kovalchuk (nephew of Yury Kovalchuk) became vice president.

The change of ownership and the full-scale invasion of Ukraine in 2022 completely altered the company. VK was obliged to delist from the London Stock Exchange and sell its lucrative foreign assets (including My.Games). Alibaba halted investment in Russian AliExpress, and the joint venture with Sberbank was closed to minimize the risk of sanctions.

At the same time, a new niche opened up for VKontakte. In essence, the company became the Kremlin’s primary contractor for building a “sovereign internet”: an ecosystem of social networks, messaging services, and other digital platforms supposed to work to the state’s rules and replace the Western firms.   

Some believed these new projects could be a source of growth for VK, with the Russian counterparts to YouTube and WhatsApp seen by company managers as potential gold mines. But even though the Kremlin tried to reform the advertising market to force Russian companies to spend their marketing money on VK products by banning advertising on YouTube, Instagram, and Telegram (legislation that has been postponed), there was no financial bonanza for VK. It turns out that a substantial proportion of the advertisements on Instagram and Telegram was always unofficial.

In recent years, VK’s focus on state-backed projects has meant it has neglected many of its commercial ventures. AliExpress, for example, unequivocally lost the battle for market share to its e-commerce rivals Wildberries and Ozon, and VK’s Youla service lost out to competitor Avito (a Russian version of eBay).

The financial consequences were predictable. In 2024, the company saw a record loss of 96 billion rubles ($1.13 billion) with income of 147.6 billion rubles. In 2025, shareholders had to recapitalize VK to the tune of 112 billion rubles in order to keep it afloat. However, the company still ended the year with a loss (albeit one of “just” 25 billion rubles) and revenue growth of 8 percent (for a major IT company, this is close to stagnation). For comparison, VK’s biggest rival, Yandex, posted revenue growth of 32 percent in 2025.

Following the imposition of EU sanctions, VK’s financial situation is almost certain to deteriorate further. All apps from VK services developed on Kremlin orders have now been removed from both the App Store and Google Play. The sanctions also obliged VK to hurriedly sell one of its key assets—app store RuStore—to senior managers and change VKontakte’s domain name from vk.com to vk.ru.

This might just be the beginning. If Google revokes VK’s access to Widevine, Digital Rights Management content (licensed movies and broadcasts) could become inaccessible, and if VK is blocked from using the Firebase cloud-based app development platform, push notifications could stop working on all VK apps.

For the moment, Android users can still download VK apps—either from RuStore or by downloading APK files from the official websites. But Google is launching its Android Developer Verification system globally in 2027, and if VK fails to obtain verification because of sanctions, this will make installing VK apps on Android devices extremely complex. This would be a major practical issue for mass-market services.

However, VK should no longer be seen as an ordinary IT company. In recent years it has begun to resemble a digital equivalent of the state-owned defense corporation Rostec. If VK once competed for users, audience share, and profit, it now builds “national” services and ecosystems for a “sovereign internet.” While private companies ask themselves which products will make them money, VK ponders what projects the Kremlin might need.

It’s likely that the company’s influential shareholders will—as in 2025—provide another multibillion-ruble injection. But the main risk for the company is not financial. If it’s unable to develop according to the laws of the market, it risks becoming a digital state corporation that exists not for profit, but to fulfill state demands. If that happens, the current crisis will not simply go down as the hardest period for VK since it was established. It will be the moment when the history of one of the oldest private internet companies in Russia comes to an end.