Russian sanctions prompt tech to stop sales, curb services

Fedorov's push to stop tech companies' services to Russia

Fedorov is calling out large tech companies on social media and asking for their support by stopping operations, product sales and services to Russia.

Apple was one of many companies Fedorov singled out on Twitter, noting that he had contacted Apple CEO Tim Cook asking him to support U.S. sanctions against Russia and block the company's App Store for Russian residents. Though the company stopped product sales, it has not blocked App Store access in Russia.

"No more @Apple product sales in Russia!" Fedorov tweeted. "Now @tim_cook, let's finish the job and block @AppStore access in Russia. They kill our children, now kill their access!"

Fedorov also used social media to ask SpaceX CEO Elon Musk to activate Starlink satellite internet service in Ukraine, which Musk did.

* Has offices in Russia

ERP companies respond at Fedorov's urging

On March 2, ERP giants SAP and Oracle suspended all operations in Russia, in response to a direct appeal from Fedorov. 

"Economic sanctions against Russia are an important mechanism in the efforts to restore peace. We are in constant exchange with governments around the world, have every confidence in their guidance, and fully support the actions taken so far," said SAP CEO Christian Klein in a blog post on Wednesday. "We are stopping business in Russia aligned with sanctions and, in addition, pausing all sales of SAP services and products in Russia." 

In a tweet, Fedorov thanked SAP for stopping sales in Russia, but argued that it was not enough.

"We ask you to stop support of SAP products as long as Russian tanks and missiles attack Ukraine," he tweeted.

More recently, SAP extended its response to the Russian invasion by stating that it is "actively shutting down our cloud operations in Russia," it stated in a March 24 blog post. The statement continued that customers in Russia who have purchased and deployed on-premises SAP products and run them in their own IT centers will be able to run those products, but that SAP will not provide support.

It's unclear how much business SAP does in Russia, but in 2018 the Germany-based ERP giant opened the SAP Experience Center Moscow to help develop SAP applications for customers in the Russian market. At the time, SAP reported having 1,600 customers and 1,300 employees in Russia. One of these customers is Gazprom, the giant energy conglomerate based in St. Petersburg. 

SAP's move to suspend new business in Russia is largely symbolic and is not likely to affect the company's bottom line, said Joshua Greenbaum, principal with Enterprise Applications Consulting in Berkeley, Calif. 

It's a good start, he said, but it may be a little easier than it seems for SAP to do because Russia's economy is not that big. 

"There are probably not huge amounts of revenue at stake relative to most, if not all, other European countries," Greenbaum said. "It's tricky, but I think you have to do something, and they did. It's a symbolic gesture but it's symbolism that matters."  

It's a complicated balancing act for SAP because it must take into account how the move will affect its Russian customers, partners and employees, he said. 

"I don't think SAP will take a financial hit per se, so it's probably not a very big deal," Greenbaum said. "But it's real and it's something that SAP is going to have to monitor very closely because it may change on a daily basis." 

The impact on Russia as companies stop services

As companies respond to Fedorov's calls for aid and Russian sanctions, the country is likely to experience a hit to its ability to produce vital technologies, said Charlotte Newton, analyst at market research firm GlobalData.

Newton said the most notable hindrance for Russia and its ability to procure vital technologies is limitations on acquiring Taiwanese semiconductors.

"Without access to those, Russia is limited in its ability to manufacture military equipment and basic devices such as laptops and smartphones," she said.

Without access to [Taiwanese semiconductors], Russia is limited in its ability to manufacture military equipment and basic devices such as laptops and smartphones.

Companies such as Apple and Google pausing certain services will have a more significant impact on Russia's infrastructure, she said.

The effects are already being felt in Russia. Huge queues were seen in Moscow subways because people were unable to pay for tickets with Apple Pay on their iPhones, Newton said. Along with halting product sales, Apple has limited services in Russia, including Apple Pay and Apple Maps.

Google also limited its Google Pay services, meaning several banks in Russia are unable to work with Google Pay and Apple Pay due to the financial sanctions, Newton said.

"While Russia represents only 2% of iPhone sales for Apple, the limits on Apple Pay will impact banks operating in Russia reliant on online transactions," she said.

While these companies wield a significant amount of global power, Newton said it's important not to overstate the companies' influences, as their response likely won't "shift the needle" on Putin's resolve to annex Ukraine.

"If the likes of Meta and Apple leave the country, they will probably be replaced by Russian alternatives, widening the gulf between Russia and the rest of the world. However, the extent to which the Kremlin can create its own version of the internet, Runet, will depend on the available resources."

HR firms respond to Ukraine crisis

ADP, a global HR provider, in response to a query about the Ukraine situation and its work in Russia, issued a statement: "ADP provides HR and payroll solutions to clients around the world. We can confirm that ADP services clients in both Russia and Ukraine, however, we do not serve any clients that are headquartered in Russia."

"We are keenly focused on our preparedness efforts to sustain our business operations and maintain compliance for our clients across the globe," ADP wrote. "We are assessing any potential impact that may result from sanctions levied by the U.S., the EU, and other countries on our relationships with clients and vendors. We are committed to remaining compliant with all laws and regulations," ADP said in its statement.

In a blog post it published Thursday, Workday said that it "does not currently sell its products or services in Russia and we have no plans to do so. And while we do not have any full-time employees in Russia or Ukraine, we do have a contingent workforce in Ukraine that we're continuing to support."

Although Workday isn't selling products or services in Russia, it may have users in that country. Its website lists Unistaff Payroll Co., with offices in Russia, as a partner. "Unistaff and Workday deliver solutions to synchronize data using Unistaff Connectors. Together our partnership provides a secure solution for Workday customers in Russia," the partner description said.

Workday also said it will help financially in relief efforts. The firm "will provide $500,000 in cash support with a $250,000 donation and $250,000 match in employee contributions." The money will go to relief organizations, including "a stipend to any employee who is opening up their home to refugees from Ukraine."

Makenzie Holland is a news writer covering big tech and federal regulation. Prior to joining TechTarget, she was a general reporter for the Wilmington StarNews and a crime and education reporter at the Wabash Plain Dealer.

News writers Adam Armstrong, Eric Avidon, Don Fluckinger, Tim McCarthy, Madelaine Millar and Ed Scannell contributed to this report.