It sounds like the west figured out that Telegram was financially vulnerable and that arresting/convicting its founder and CEO would be likely to destroy the company, thereby eliminating a non-western controlled information source. As the Kim Iversen video at the bottom shows, they are seeking to do the same to Twitter/X. This, combined with reports of anti-war/anti-establishment journalists being harassed and arrested by the British government and regular British citizens being arrested for social media posts, these are dark days for freedom of speech in the west. – Natylie

The Bell, 9/3/24

Pavel Durov opposed strict moderation — it could cost him his freedom, and his company

Telegram founder and Russian tech icon Pavel Durov spent just 96 hours in a French jail. Released on house arrest, the case is far from over, and will have repercussions way beyond him and his platform. The saga looks set to go a long way towards shaping the future relationship between Western democratic governments and internet platforms in general.

• Pavel Durov’s four-day detention came to an end on Aug. 28, when a Paris judge granted him bail. Durov was officially indicted on a string of charges — all related to Telegram’s “complicity” in crimes plotted, planned and executed over the platform. Although out of jail, Durov is obliged to report to the police twice a week and cannot leave France. The substance of the allegations against him can be summed up in a single phrase: Telegram has consistently failed to cooperate with French police in its attempts to investigate crimes committed with the help or, or explicitly enabled by, the platform.
• The Bell spoke with people close to Telegram’s leadership and those working for the platform about how Telegram moderates content and typically doesn’t cooperate with Western law enforcement bodies — and how this set Durov on a collision course with French authorities.
• Telegram has just 50 employees — 30 of which are developers, Durov said in an interview with Tucker Carlson this spring. He contrasted his company’s lean approach with rival big-tech companies that, he said, had bloated headquarters and inefficient processes. The company has no HR department or many other divisions that would be mandatory for a large business. It’s reasonable to conclude from this that there has never been a significant number of people working on content moderation for the service. Everything that can possibly be automated is automated, one source told The Bell.
• Telegram has three levels of moderation, said Fedor Skuratov, creator of the Combot moderation service. The first is in chats, communities and channel comments. These are moderated by admins, using outsourced solutions. Level two is a complaints system. Any user can report any public post (though not private ones) using a “Report” button in the app. Users can do this to highlight pirated content, threats, pornography or child abuse. External contractors moderate these complaints — but nobody knows who they are or how many are involved. The third level of moderation is an algorithm that is mostly used to filter spam in private messages based on suspicious patterns of behavior associated with bots. Automated moderation can be used in group chats, but it tends to be unpredictable and therefore the feature is rarely activated. 
• The weakness of this moderation framework is partly explained by an approach purposefully adopted by Telegram’s creators. Moderation options exist on a spectrum. At one extreme is Meta, which blocks or suspends users for even minor infringements. At the other end is Telegram, which argues that censorship benefits nobody and it should staff as hands-off as possible. “Durov believes that the platform should not interfere with what people write to one another in private messages on Telegram,” one of his acquaintances explained. For example, as long as pornography is not published on public channels, leave it alone. “The most important thing for moderation on Telegram is user comfort, so that they don’t receive unwanted messages. There are essentially no restrictions on users being able to find something on Telegram for themselves,” explained Skuratov.
• A second reason behind the approach is more of a business factor: Telegram’s aversion to hiring more staff. The company believes this would strip them of their advantages of being a small, flexible business, as well as threaten security. “Hiring human moderators is a one-way street — there will never be enough of them,” Skuratov said. “And there is a high risk of leaks: the more people with access to data, the worse it is for security,” he added. When Telegram was just starting out, this approach worked. But the problem has grown as it became a service with hundreds of millions of users — making it impossible to comply with even its own small set of rules. As a result, specific content began to leak into the public parts of Telegram and due to a lack of people and money, Telegram could not cope.
• There’s another important business factor. Almost from day one, Telegram wanted to act not just as a messenger, social network and blog platform, but also as a marketplace. Back in 2015, Telegram introduced the opportunity to create bots that made it easy to set up a simple online store inside the app. But unlike the Apple or Google stores, Telegram had no moderation of these mini-apps, meaning developers could release anything they wanted without any meaningful checks. This lowered the entry threshold, paving the way for a plethora of different businesses to flock to the platform — including those operating in the black, or gray market. For instance, the platform became famous years ago in Russia as a hotbed for the trade of personal data — with people able to buy gigabytes of information, hacked or leaked, for next to nothing.

What next for Telegram?

• Telegram’s financial position was already uncertain before Durov’s arrest. From launch, the company struggled to monetize the platform. At first it was financed by Durov’s personal funds from the sale of VKontakte. Then the company tried to launch its own crypto token, which was successful with some of the world’s most well-heeled investment funds — but was ultimately blocked by the US Securities and Exchange Commission. Over the last three years, Telegram has turned to loans, having placed bonds worth more than $2.3 billion.
• Durov’s arrest could tip the company into a financial crisis, the Financial Times wrote after analyzing the company’s previously secret financial statements for 2023. Telegram has no money of its own and is massively unprofitable, the FT found. In 2023, the platform had revenues of $342 million, posting an operating loss of $108 million and a post-tax loss of $173 million. The company partially covered those losses by increasing the value of crypto assets on its balance sheet, which were valued at almost $400 million.
• The debt on the Telegram’s bond-issuing spree is due to be paid off by March 2026. If the company conducts an IPO before then, the bonds are converted into shares at a discount — a good deal for Telegram. If not, the platform must repay bondholders with interest (at a rate of 7% per year). With Durov facing a lengthy legal saga that could end in years of prison time, it’s unclear whether a stock market launch is still on the table. The FT suggests not: the case against Durov is already causing too much damage to an already unprofitable business.
• Investors are nervous. Telegram bonds fell below 90 cents on the dollar after Durov was arrested. And Telegram is in no rush to reassure its backers. According to one bond holder, there has been no contact from the company’s representatives in the past week.

Why the world should care

For the first 10 years of Telegram’s existence, Pavel Durov managed to strike a balance between privacy and public safety. If Telegram had found a more reliable means of monetization, it might well have had the funds to pay more attention to security and moderation, as its bigger competitors do. We will soon find out whether the service will get a second chance. In post-Soviet countries, it’s worth remembering, this is not just about the survival of gray businesses and shady online marketplaces, but of one of the last major platforms for free speech.