Multinational Tech Firms Questioned Over Intent and Impact of Leaving Russia
An IKEA in Moscow, one of many companies pausing operations in Russia. Photo: Reuters via ABC
Multinational tech companies are part of the major Western businesses and governments sanctioning Russia. Ukraine’s minister of digital transformation, Mykhailo Fedorov, urged businesses to sever ties with Russia on Facebook, describing how he, “asked YouTube to block the Russian propaganda media, which call us Nazis and drug addicts, lie and promote war. Asked Meta to block Facebook and Instagram. I asked Netflix to block the service in Russia.”
Some analysts question the impact suspending tech services will have. Erik Gordon, a business professor at the University of Michigan, says it’s unlikely the pauses made by Western companies will impact the Russian invasion, though he does understand their motives. “It’s difficult for companies to stay out of [current events], '' he said in an interview with ABC News. “If you don’t take a stand one way or another the conclusion is you’re either amoral or taken a bad stand.”
The effort made by tech firms to display corporate social responsibility in support of Ukraine has rubbed some the wrong way, who believe their actions are driven by an attempt to save their bottom line. In a blog post, one individual wrote that pausing operations in Russia will have no effect on companies’ exploitation of cheap labor in other parts of the world, and that, “[companies] have no problem reactivating their plants in Russia once the post-war reorganization allows it - they care about maximizing their profits, not about ethics and morality.”
The financial strain a company like Netflix will endure by their suspending operations is non-threatening. The Russian market makes up a meager percentage of the company’s subscription base, at just under 1 million subscribers. Netflix stopped acquisitions and projects in Russia when the invasion on Ukraine began, including four series in production and post-production.
Other entertainment tech companies, like Disney, announced a pause on debuting films across the country, and was joined by Sony, Paramount Pictures, Universal and Warner Bros. Social media juggernauts are attempting to clamp down on Ukraine-Russia war propaganda, like Twitter, which will take measures to reduce content from the Russian government.
A closed Apple reseller shop in Omsk, Russia on March 2, 2022. Photo: Evgeniy Sofiychuck/ Associated Press
PayPal announced the shutdown of operations in Russia, and will “continue work to process customer withdraws for periods of time, ensuring that account balances are dispersed in line with applicable laws and regulations.” Earlier in the week, Russians were unable to open new PayPal accounts.
Product sales from other tech companies like Microsoft and Dell have ceased, while businesses outside of tech like automotive company Mercedes Benz, financial services company Mastercard, and clothing company H&M have also cut ties with the transcontinental conflict in one form or another.
The war is plainly unfavorable, though it’s clear that calculating the business economics and fate of employees working in Russia make suspending services a complex decision. While firms across industries have responded favorably to the plea of Ukraine’s minister of digital transformation, their impact remains to be seen.