Tech Companies Like Microsoft and Netflix Exodus Out of Russia

There’s been a massive exodus of corporations leaving Russia over the war on Ukraine. This includes Netflix and Microsoft.

Russian president, Vladimir Putin, doesn’t want people saying that there is a war on Ukraine right now. This despite the evidence that what is going on in Ukraine is basically Putin’s war on Ukraine. Of course, Putin’s war on Ukraine is making Putin look bad. So, in response, he has threatened to detain people who are opposed to Putin’s war on Ukraine for calling it Putin’s war on Ukraine for 15 years. In Putin’s mind, calling Putin’s war on Ukraine a war on Ukraine might be upsetting to Putin who is engaging in war on Ukraine.

Of course, efforts to try and pretend Putin’s war in Ukraine isn’t a war on Ukraine doesn’t even pass the laugh test. So, in response to Putin’s war on Ukraine, numerous corporations are finding themselves on an exodus out of the country. Already, we mentioned that PayPal, MasterCard, and Visa have all suspended services in Russia over Putin’s war on Ukraine. This is far from the only companies who have responded to Putin’s war on Ukraine, though.

There are many in the tech world who have decided that Putin’s war on Ukraine is a bridge too far for them. Microsoft has announced that, in response to Putin’s war on Ukraine, they will stop selling their products in Russia. From the BBC:

Microsoft said it had paused other aspects of its business in the country to comply with government sanctions.

It added that it was providing cyber-security support to Ukraine to defend against cyber-attacks initiated by Russia.

“Since the war began, we have acted against Russian positioning, destructive or disruptive measures against more than 20 Ukrainian government, IT and financial sector organisations,” Microsoft president Brad Smith said in a statement.

Another company that has stopped selling products in Russia is Dell Technologies. They also said that they were halting sales in Russian in response to Putin’s war on Ukraine. From the Wall Street Journal:

Dell Technologies Inc. has suspended product sales in Russia, joining a growing number of large Western companies re-evaluating their businesses there in response to the country’s invasion of Ukraine.

Texas-based Dell said Tuesday it was monitoring the situation to determine its next steps and working to assist employees affected by the conflict.

Several other Western companies are curtailing their operations in Russia or, in some cases, leaving entirely.

Putin’s war on Ukraine also sparked similar responses from H&M, Oracle, and EA. From Reuters:

Netflix, fashion outlet H&M, tech company Oracle and many others cut or paused business in Russia on Wednesday because of the attack on Ukraine, while the United States laid out new sanctions and a Ukrainian official outlined to Reuters plans for fanning corporate support.

Oracle’s announcement on Twitter came about three hours after Ukraine’s minister of digital transformation tweeted to the company for support. Deputy Minister Alexander Bornyakov told Reuters that Ukraine has sought help from 50 different companies, part of a strategy to isolate Russia and get citizens to turn against their government. “More sanctions imposed, faster peace restored,” Borynakov said.

Joining the exodus from Russia thanks to Putin’s war on Ukraine is Apple. They said that they would stop selling products in Russia. From ZDNet:

Apple’s decision to stop selling products in Russia as a result of the Ukrainian invasion will cost the company revenue — but in the grand scheme of things, it’s a small price to pay.

Phone case maker Burga crunched the numbers and worked out that Apple will lose about $3 million a day in iPhone sales alone. This means some $1.1 billion over a year.

A drop in the ocean for Apple, a company that generated revenues of $123.9 billion last quarter alone.

But it’s important to remember that there’s more at stake here than iPhone sales.

First, consider growth. Smartphone sales, and in parallel, iPhone sales, have been rising steadily in Russia over the past few years, growing some 200% between 2014 and 2021.

Online streaming giant, Netflix, has said that, in response to Putin’s war on Ukraine, it is halting future projects in Russia. From the BBC:

Streaming giant Netflix has announced it has paused all future projects and acquisitions from Russia.

The company said it was assessing the impact of the current invasion of Ukraine.

Filming for the production of Russian language series Zato will be halted.

Search engine giant, Google, has also seen what is going on with Putin’s war on Ukraine. They have responded by suspending advertising in Russia. From CNN:

Google (GOOG) has suspended all advertising in Russia, the company confirmed to CNN Friday.

“In light of the extraordinary circumstances, we’re pausing Google ads in Russia,” the company said in a statement. “The situation is evolving quickly, and we will continue to share updates when appropriate.”

The decision covers all Google’s ad surfaces in Russia including Google display advertising, YouTube and search, the company said. Google’s decision was first reported late Thursday by Reuters.

Amazon has also decided to suspend Netflix Prime and halted shipments to Russian in response to Putin’s war on Ukraine. From Yahoo! News:

Amazon is taking an even stronger stance against Russia following its invasion of Ukraine. The company announced today that it will suspend shipments of products in Russia and Belarus, as well as halt access to Prime Video in Russia. Additionally (though perhaps less impactful), Amazon also won’t be taking more orders for its MMO New World in Russia.

“Unlike some other U.S. technology providers, Amazon and AWS have no data centers, infrastructure, or offices in Russia, and we have a long-standing policy of not doing business with the Russian government,” the company said in a blog post.

Social media platform, TikTok, has also responded to Putin’s war on Ukraine (and the subsequent “fake news” law) by suspending video creation in that country. From The Verge:

TikTok is suspending new video uploads and livestreams on its app in Russia, citing the country’s newly-passed “fake news” law as the reason for the change.

“In light of Russia’s new ‘fake news’ law, we have no choice but to suspend livestreaming and new content to our video service while we review the safety implications of this law,” TikTok writes on Twitter. “Our in-app messaging service will not be affected.”

Obviously, all of this is largely on the tech side of things. There is also a much broader corporate response as corporations continue to pull out of Russia in response to Putin’s war on Ukraine. As a result, there’s plenty of infrastructure that is now just being left standing and vacant. So, Russia has proposed a new law nationalizing the now vacant properties. From Yahoo! News:

A senior member of Russia’s ruling party has proposed nationalising foreign-owned factories that shut down operations in the country over what the Kremlin calls a special military operation in Ukraine.

Several foreign companies including Ford and Nike have announced temporary shutdowns of stores and factories in Russia in order to put pressure on the Kremlin to stop its invasion of neighbouring Ukraine and as their supply chains are disrupted.

In a statement published on Monday evening on the United Russia website, the secretary of the ruling party’s general council Andrei Turchak said shutting operations was a “war” against the citizens of Russia.

The statement mentioned Finnish privately owned food companies Fazer, Valio and Paulig as the latest to announce closures in Russia.

“United Russia proposes nationalising production plants of the companies that announce their exit and the closure of production in Russia during the special operation in Ukraine,” Turchak said.

“This is an extreme measure, but we will not tolerate being stabbed in the back, and we will protect our people. This is a real war, not against Russia as a whole, but against our citizens,” he said.

It’s a bizarre move on the Russian governments side of things. After all, you then have to have those expertise to replace those who aren’t coming back. You then have to consider the contracts of those maintaining said factories. Then, there’s the supply chain issues that have to basically be rebuilt as well as the loss of access to intellectual property which can have an impact on that. There’s so many logistics that goes into a factory beyond the physical property.

What’s more is that if things reach a resolution and things begin to go back to normal, what incentive do these corporations have in returning to Russia when the property was nationalized in the first place? If anything, this move makes matters more complex and worse for Russia in the first place. Those corporations, if anything, are being incentivized to stay out of Russia.

All this coupled with the financial blockades and the crippling sanctions levied against Russia, and it’s no wonder the whole Russian economy is in a massive free fall. Still, despite all of this, it looks like Putin is continuing full steam ahead with his war on Ukraine. There’s no other way of saying it, but things are looking disastrous for Russia right now and we all know that the population is going to take the brunt of it.

Drew Wilson on Twitter: @icecube85 and Facebook.

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