From Russia With Chokehold: Putin Says Foreign IT Firms Still In Russia Should Be 'strangled'

Russian President Vladimir Putin said foreign tech providers still operating in Russia should be "strangled" as the country develops domestic alternatives.

Putin made the remarks on Monday in a Kremlin briefing with Russian leaders, responding to complaints from Iva Technologies CEO Stanislav Iodkovsky. According to The Moscow Times, Iodkovsky said Russian IT firms were losing billions because of competition from US companies like Microsoft and Zoom - even as these firms have scaled back or pulled out of the market since Russia's 2022 invasion of Ukraine and the resulting international sanctions.

"They are trying to strangle us – we must reciprocate," Putin said in a Telegram post, as translated through Google Translate.

A translation published by the Hindustan Times on a video of Putin's speech offers a similar assessment.

"We provided the most favorable working conditions in our market and now they are trying to strangle us, as our colleague mentioned," Putin reportedly said, referring to Iodkovsky. "We need to return the favor to mirror their actions."

The Russian leader went on to describe the challenges Russia and its business community have faced in the past few years, dating back to the 2014 removal of Ukrainian President Viktor Yanukovych, which Putin characterized as a Western-backed coup.

Russia has rejected Ukraine's democratic reforms since 2014, and the leadership of Ukrainian President Volodymyr Zelenskyy since 2019, then invaded the country in 2022, leading to international sanctions. That's when Western tech companies largely pulled out of the country.

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Microsoft in 2022 said it had suspended "all new sales of products and services in Russia," although service for existing customers continued. In April 2023, Redmond agreed to pay several million to settle allegations that it had flouted sanctions by selling to individuals and companies in Russia, Iran, and other US-sanctioned nations.

Then, in August 2023, Microsoft informed businesses in Russia that it would stop renewing software licenses in October of that year, and shortly thereafter started disconnecting Russian customers from the Microsoft 365 and Office 365 cloud services, Tass reported. According to Forbes Russia, some 70 to 90 percent of Russian businesses were using Microsoft products or services at the time.

However, Microsoft still had enough outstanding contracts and business partners to keep making money there. According to The Moscow Times, the tech giant's Russian subsidiary in 2024 reported a 38.9 percent increase in net profit, amounting to 174.1 million rubles (~$2.17 million at current exchange rates).

And in May 2024, Russia Today reported that Microsoft was allowing users to download updates to some software without forcing them to go through a VPN.

Microsoft did not immediately respond to a request for comment. ®