Microsoft’s Russian subsidiary, Microsoft Rus LLC, has announced plans to file for bankruptcy, as indicated in a notice on Russia’s official Fedresurs registry. This move follows the company’s gradual withdrawal from the Russian market since the onset of the Ukraine conflict in 2022.
Microsoft Rus LLC to File for Bankruptcy Amid Ongoing Withdrawal from Russian Market
Microsoft’s Russian subsidiary, Microsoft Rus LLC, has announced plans to file for bankruptcy, as indicated in a notice on Russia’s official Fedresurs registry. This move follows the company’s gradual withdrawal from the Russian market since the onset of the Ukraine conflict in 2022.
Timeline of Microsoft’s Exit from Russia
- March 2022: Microsoft suspended all new sales of products and services in Russia in response to the invasion of Ukraine.
- June 2022: The company began significantly scaling down its operations, resulting in the layoff of over 400 employees.
- July 2022: Microsoft reported a $126 million loss due to its decision to exit the Russian market, citing operating costs related to troubled debts, asset impairments, and severance payments.
- 2023: The combined revenue of Microsoft’s Russian legal entities plummeted from 6.87 billion rubles in 2022 to 217 million rubles, a 31-fold decrease.
- March 2024: Microsoft blocked Russian corporate customers from accessing its cloud services, including Microsoft 365 and Azure.
Impact on Microsoft’s Russian Operations
The bankruptcy filing of Microsoft Rus LLC marks a significant step in the company’s exit from Russia. However, it remains unclear how this will affect Microsoft’s other Russian entities, such as Microsoft Development Centre Rus, Microsoft Mobile Rus, and Microsoft Payments Rus.
Despite the scaling down, reports in 2024 indicated that some Microsoft services, including Windows updates and Office applications, were still accessible in Russia without the need for VPNs. This raised questions about the company’s complete withdrawal from the market.
Broader Context: Western Tech Companies Exiting Russia
Microsoft’s move aligns with a broader trend of Western technology companies reducing or ceasing operations in Russia due to geopolitical tensions and sanctions. In 2022, Google’s Russian subsidiary filed for bankruptcy after authorities seized its bank accounts, making it untenable to continue operations.
The Russian government has been advocating for the replacement of foreign service providers with domestic alternatives. President Vladimir Putin recently emphasized the need to “throttle” foreign providers like Microsoft and Zoom to promote local software solutions. Reuters
Conclusion
Microsoft’s decision to file for bankruptcy in Russia signifies the culmination of its phased withdrawal from the country. As geopolitical tensions persist and sanctions continue to impact foreign businesses, the Russian market is witnessing a significant shift towards domestic technology solutions.
