Microsoft has joined a long list of over 200 companies that have suspended sales and operations in Russia amid the Ukraine-Russia conflict. The decision by Redmond follows broad economic and technological sanctions imposed by the U.S. and several European countries against Russia. However, this technology exodus from Russia may not be in the best interests of the U.S. tech sector.
Microsoft is the latest of the big tech giants to announce the suspension of sales in Russia. The company said it wouldn’t book any orders from Russia amid the Ukraine-Russia conflict. “We are stopping many aspects of our business in Russia in compliance with governmental sanctions decisions,†Microsoft president and vice-chair Brad Smith wrote in a blog post.
“We believe we are most effective in aiding Ukraine when we take concrete steps in coordination with the decisions being made by these governments and we will take additional steps as this situation continues to evolve,†he added, emphasizing that only new sales are being suspended.
This means Microsoft’s products and services, including Windows OS, Office productivity suites, games, and probably cloud services, won’t be available in Russia until the company announces otherwise.
Microsoft joins other tech giants Apple, Google, Amazon, Meta in withdrawing from or suspending operations to a certain degree in Russia. Others such as IBM, Intel, Samsung, Oracle, SAP, Dell, Ubisoft, Electronic Arts, Epic Games and over 200 other companies have also taken similar steps per government sanctions.
Here’s a list of the major tech companies that have curtailed or limited their operations in Russia:
|
Company |
The Extent of Withdrawal/Suspension |
| Microsoft |
Suspended all new sales |
|
Apple |
Stopped all sales and online transactions and capped Apple Pay |
| Google/Alphabet |
Suspended search advertising including on YouTube |
|
Amazon |
Suspension of some Russian sellers |
| Meta |
Limited ads as well as the presence of Russian state media |
|
IBM |
Suspension of tech sales |
| Intel |
Suspended sale of sensitive |
|
Samsung |
Stopped all shipments |
| Accenture |
Business closure |
|
AMD |
Suspended sale of sensitive tech |
| Dell |
Stopped all shipments |
|
Oracle |
Suspended all operations |
| SAP |
Stopped all sales |
|
DXC Technology |
Business closure |
| HP |
Stopped all shipments |
|
NVIDIA |
Stopped all sales |
| Nintendo |
Stopped all sales |
|
Epic Games |
Stopped commerce but not blocking access |
| Electronic Arts |
Stopped all operations, removed the Russian team from the popular game FIFA |
|
Activision Blizzard |
Stopped all sales |
|
Limited Russia-linked ads |
Besides core tech companies, Spotify, Netflix, Disney, PayPal, Visa, Mastercard, the Big Four accounting firms Deloitte, KPMG, PwC, Ernst & Young; sporting bodies FIFA, UEFA, Formula One; TSMC, Global Foundries, Uber, several auto giants, AirBnB, and others joined the exodus in varying levels.
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However, the cessation of trade could come at an economic cost for Russia and the U.S. and other countries. But the decision to stay in Russia may have more significant ramifications, as Jeffrey Sonnenfeld, senior associate dean for Leadership Studies & Lester Crown Professor in the Practice of Management, pointed out to Forbes.
Sonnenfeld said, “Despite the cost of abandoning major investments and the loss of business, there is a strong reputational incentive to withdraw. Companies that fail to withdraw face a wave of U.S. public resentment far greater than what they face on climate change, voting rights, gun safety, immigration reform, or border security.â€
This is important because two-thirds of Americans supportOpens a new window the U.S. government’s sanctions against Russia. And going by the rate at which the west is imposing sanctions on Russia, technological and otherwise, it doesn’t look like sales will resume any time soon.
Even TikTok, a Chinese-owned social media company, is suspending new content posts and live streaming in Russia. Although, unlike others, TikTok owner ByteDance’s decision is not necessarily influenced by the sanctions that the U.S.-led west is imposing on Russia. It is based on Russia’s new law, which criminalizes sharing fake news on the conflict.
From an economic standpoint, the sanctions are indeed causing significant damage to the Russian economy. The Ruble is down to a historic low, and Russia’s GDP is forecasted to contract by 15% Opens a new window in 2022. But they may also force Russia to rely more on technologies originating from China. The latter abstained from voting in the U.S.-led UN resolution condemning Russia for invading Ukraine.
If the sanctions persist and U.S. companies continue to toe the government line, it is possible that Chinese products, software and apps could soon become mainstream in Russia. For example, Microsoft’s Office can be replaced by WPS Office, Azure by Alibaba Cloud or Huawei, and games offered by Activision Blizzard and Electronic Arts by Tencent. Similarly, China’s UnionPay could soon fill the void created by the exit of Visa and Mastercard. Chinese phone makers like Xiaomi and OnePlus could also take over from the likes of Apple and Samsung.
So far, no U.S.-based social media service has outright banned platform accessibility from Russia. TikTok’s decision to suspend some features could be short-lived. Its in-app messaging service continues to function in Russia.
Pulling the technology plug from Russia could empower China, the U.S’s biggest technological and trading rival. It is a tricky situation for the technology sector, but organizations have limited options as of now.
Russia may also be on the verge of legalizing piracy, according to a documentOpens a new window obtained by the Russian publication Kommersant. This can alleviate the impact of some products such as operating systems, games, etc., but may not be as useful for SaaS-based offerings.
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