Did Putin's warning cause Microsoft to depart Russia?

Russian media outlets report that one of Microsoft Corp’s subsidiaries in Russia, Microsoft Rus LLC, intends to file for bankruptcy, citing a notice published on May 30 via Russia’s official Fedresurs registry. The announcement coincided with a statement made by Russian President Vladimir Putin a few days earlier, who called for the throttling of foreign service providers like Microsoft and Zoom in favour of domestic alternatives.

Microsoft had continued offering essential services in Russia even after Moscow's invasion of Ukraine in February 2022. However, by June that year, the company announced a significant downsizing of its Russian operations, citing changes to the economic environment and the impact on its business. Shortly after the outbreak of military hostilities, Microsoft also removed mobile apps from Russian state-owned media outlet RT from the Windows App Store and restricted advertising for Russian state-sponsored media.

During a recent meeting with Russian business leaders focused on assessing specific sectors of the economy, one participant complained to Putin that some U.S. companies claiming to have exited Russia—including Microsoft—continued to operate. Microsoft had announced it was halting new sales in Russia in 2022, and Russian lawmakers have long criticised Zoom.

“We need to strangle them. I completely agree,” Putin responded. “I say this without any embarrassment, because they are trying to strangle us. We need to reciprocate.”

Microsoft has three additional entities in the country: Microsoft Development Centre Rus, Microsoft Mobile Rus, and Microsoft Payments Rus. It remains unclear how these units will be impacted by the bankruptcy filing.

Google’s Russian subsidiary, owned by Alphabet, filed for bankruptcy in 2022, citing the seizure of its bank account by Russian authorities, which made it impossible to pay staff, suppliers, and vendors in the country.

Since 2022, following the start of the war in Ukraine and the tech giant's business reduction in Russia, "Microsoft Rus" has faced dozens of lawsuits totalling millions of roubles from Russian companies that had purchased Windows and Office licenses. The lawsuits were related to breaches of contractual obligations, and among the plaintiffs were Russian enterprises Severstal, Aeroflot, VTB, MegaFon, Lenta, Surgutneftegas, Gazprombank (which demanded over $1 million), and others.

By Nazrin Sadigova