Tech’s Russia withdrawal might be doing more harm than good

Tech companies are pulling out of Russia in response to the attack on Ukraine, but some experts say they need to move on.

Apple has stopped selling all of its products in Russia, while Microsoft is suspending all new sales of its products. The marquee names join a long list of companies pulling out of the country. The exodus raises many ethical and practical problems.

“Companies need to look at how to create opportunities for these refugees and stability for them,” Raj Shah, North America Lead for Technology, Media and Telecom at digital consultancy Publicis Sapient, said in an interview.

technical disposal

Russians have lined up to stock up on Ikea furniture, stock their wardrobes with Uniqlo clothes and sample McDonald’s, KFC and Starbucks before the companies shut down operations in Russia during the war. When Apple and Samsung jumped on the move, Russians rushed to buy imported smartphones and other electronics before supplies dwindled.

Just as China has Baidu, Alibaba and Tencent to replicate the Google, Facebook and Amazon of the West, Russia can easily build its own “homegrown” versions.

As international companies pull out of Russia, domestic companies are likely to take steps to fill the void, Shah said. Russia has an educated population, many of whom had already switched to a de-Western array of social media and e-commerce platforms and tools. “Severing many of those ties with the West will be painful, but not irreplaceable,” Shah added. “And if countries like China don’t cut those ties, Russia will have access to the technology it needs to replace or replicate much of what it’s blocked, but with more government control. Just as China has Baidu, Alibaba and Tencent to replicate Google, Facebook and Amazon of the West, Russia can easily build its own “homegrown” versions.

But cybersecurity analyst Joseph Steinberg said the Russian government is replacing US technology products with Chinese offerings. As a result of the boycott, US companies are shrinking their position within Russia’s infrastructure and reducing the capacity to conduct future intelligence or cyber-attack operations.

“Given that China poses a much greater threat to our national security and to that of the West in general than Russia and that the Chinese government is an immorally repressive regime with little respect for human rights, today’s boycotts could do much more damage to of freedom in the long run than they benefit from it,” Steinberg added.

Fighting disinformation

Twitter has rolled out a series of updates on its platform. Twitter

The invasion marks the beginning of what Wasim Khaled, the CEO of cybersecurity Blackbird.ai, calls the “Future of Conflict.” The term includes real-time Tik Tok and Twitter updates, social media engagement, and influencers who influence public opinion.

“While cyber activism plays a key role in motivating people to band together and put them to shame if they don’t, disinformation on social media blurs the lines of what’s really happening – making it difficult to discern which side is the ‘right side,’” Khaled said in an interview. “Global conflicts are taking place on land and online, and individuals are armed and empowered with smartphones, making this event unlike any other in history. The invasion of Ukraine is the basis for all future geopolitical events of this magnitude and it is clear that social media will remain an important area in the war landscape.”

“Tech companies like Meta and Twitter have effectively blocked or removed a lot of misinformation and propaganda campaigns launched at the outset of the invasion,” Khaled said. However, the influence of these earlier campaigns still drives contemporary stories.

“Since the beginning of the invasion, the aim has been to discourage Russian propaganda artists from having any other instrument in their war chest and while success has been demonstrated on this front, it is done reactively, which still leaves room for error and a shows a lack of preparedness.”

Protecting reputations

Technology analyst Rob Enderle said the withdrawal from Russia was motivated by brand protection and liability protection.

“Companies were called out and people were boycotting them for not leaving Russia, and sanctions could have put their assets at risk,” he added. “So they left the country to protect their brands and make sure they wouldn’t be on the wrong side of sanctions.”

Big Tech’s reactions to the war in Ukraine have been mixed. For example, Google Pay and Apple Pay can no longer be used in Russia, while Meta disabled the ability for Russian state media to monetize Facebook and Instagram content.

For tech companies, the revenues generated in Russia are only a small fraction of their global revenues, so taking steps to remove themselves from Russia is symbolic and won’t impact their bottom line much.

“A company’s response to the crisis affects its reputation — that is, how customers perceive the response and how it affects the sale of products and services,” said Pam Drake, a professor at James Madison University with expertise in finance. and business, in an interview. “A company’s management and decisions affect the value of the company’s ownership interest and, while profit affects the value of a company, so do risks and reputational risks.”

“Another consideration is that a company may have contracts that are difficult to settle and breaking these contracts can lead to liability,” Drake added. “In some cases, companies have failed to negotiate franchise agreements due to complex contracts.”

“For technology companies, the revenues generated in Russia are only a small part of their global revenues, so taking steps to remove themselves from Russia is symbolic and will not greatly impact their bottom line,” Drake said.

“That’s why these Big Tech moves are mainly symbolic and reputation-enhancing. In other words, avoiding Russia will not materially affect Big Tech’s profitability, but not avoiding it would hurt Big Tech’s reputation and stock value,” Drake added.

Weighing the moral argument

Alexey Furman/Getty Images

“The ethics of canceling Russia using economic weapons is complicated,” Drake said. “Are we enlisting an entire country because of an autocrat who has lost control? Have actions against Russian artists, athletes and oligarchs changed the course of the war?”

“In the short term, this doesn’t seem to change Putin’s war, but maybe in the longer term as the country becomes more isolated,” Drake said. “However, there is always the risk that this isolation will intensify the struggle of ordinary Russians against the West and risk an extensive war.”

Many companies are trying to walk a fine line between punishing the Russian government for the invasion of Ukraine and protecting the livelihoods of their employees, Enderle said. For example, some companies that have left Russia have provided up to 90 days’ wages in Russia to their dismissed employees.

“On the other hand, support is pulling from franchisees where they are likely to default on the related contracts, but since those contracts have to be enforced in Russia, it will only become a major problem if they plan to return,” he added. ready. “The workers are not to blame for the war and so should not be punished individually.”

Sergii Opanasenko, the co-founder of Ukraine-based web development company Greenice, said companies should not be allowed to stand on the sidelines of the conflict.

“Whether the company decides to continue as normal or not, it is a choice and representation of whose side you are on,” he said. “If you continue to work in Russia, you are indirectly supporting this war, period.”

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