The fact that they closed the blog, it's only because the US government to put pressure on Intel.
This is not a question of "totalitarian dictates" and "handing user data to the government", but about keeping the data of Russian users on the servers, residing in Russia, and not, say in US. It's a matter of national security. The data would be available to the Russian government, provided valid court procedures are observed. If the information is stored in the US, and Russia has need for that information (e.g. on suspicion of terrorism), do you think US would cooperate?
To turn the question around: how would you, as an American, feel if your personal data was stored somewhere in North Korea. How would US government feel about it?
For my part, I am not particularly happy about the "know your customer" stuff that companies doing business in or with US are obliged to compile, and the information collected being kept in US, available to the American government, as we learned from Snowden, even without court orders.
How would I like it? You act as if this is not happening to everyone on the globe. Furthermore I posted this because I think it is totalitarian, along with the global NSA data collection, and I don't agree with any of it. I like Russia, they have problems like the US does too. If I were to pick one country most like the US, I would say it is Russia. They are crazy, they love their guns, they like to party, and they are both run by totalitarians. Sounds like a description that fits both countries to me.
Furthermore about your point, this is also a problem within the US as well. Little known fact: the NSA takes all the information it collects on US citizens, then sends it to FOREIGN companies for data extraction and monitoring. So in fact the EXACT same thing is being done to the US people and every other people. So please, don't talk to me like I helped set up the NSA network and I am gung ho about it. This is not my issue to defend, I don't like it either.