The power of tech giants has made them as influential as nations. This is how they sanction Russia
The world’s five major tech companies – Google (now Alphabet), Apple, Facebook (now Meta), Amazon and Microsoft – have taken steps to impose significant and (mostly) voluntary sanctions on Russia, in response to its invasion of Ukraine.
But the decisions did not come spontaneously. Ukraine has lobbied big tech companies the same way it has asked for help from the European Union, NATO and the US government.
Facing the biggest military action in Europe since World War II, Ukraine has directly appealed to big tech companies as if they were nation states. It is a reminder that in today’s world, these giants are major players on the geopolitical scene. So what impact could tech-related sanctions have?
The Big 5’s response
Google’s response to the crisis took place in two parts. The first was related to finance. The company has restricted the use of Google Pay in Russia for customers or merchants who use a sanctioned bank.
It also stopped selling online advertising in Russia across all of its services and removed the ability for Russian state media Russia Today (RT) and Sputnik to monetize content on YouTube (which is owned by Google). ). RT and Sputnik were also blocked in Europe.
Foxtel has taken down RT in Australia, but it’s still available on YouTube, with adverts in the livestream. This means that RT can derive direct revenue from advertising in Australia, but not advertising revenue from YouTube. Google Search and Maps remain available in Russia.
Apple has gone several steps further than Google. The company suspended all product sales in Russia, and Apple Pay and other services were restricted. It also blocked RT and Sputnik from the Apple App Store anywhere outside of Russia.
Meta removed access to RT and Sputnik on Facebook and Instagram (which it owns), and removed the ability for state media to monetize content on any of its platforms. It also downgrades posts with links to Russian state-controlled media websites on Facebook.
Amazon has chosen to support cybersecurity efforts in Ukraine and offer logistical support, as announced on Twitter by chief executive Andy Jassy. However, Amazon has not yet taken any action to reduce the revenue it receives from Russia.
Microsoft also helped on the cybersecurity front. He identified a potential Russian cyberattack in Ukraine on February 24, helping efforts to thwart it. In addition, it banned all RT and Sputnik advertisements on its advertising network and blocked access to both channels in the European Union.
(Almost) no tokens for Russia
Two of the largest US semiconductor (microchip) makers, Intel and AMD, have stopped supplying to Russia. Although official US sanctions prohibit the export of “dual-use” devices for military and non-military purposes, Intel and AMD have gone further and halted all supplies at this point.
Perhaps more importantly, major Taiwanese supplier TMSC has ceased supplies. TMSC manufactures chips for Russian manufacturers such as the Russian Scientific and Technical Center Module, Baikal Electronics and Marvel Computer Solutions. There are no alternative semiconductor manufacturing plants in Russia.
Samsung Electronics, another major chipmaker, also said on Saturday it would suspend shipments. Samsung is the leader in mobile phone supplies in Russia and, before Saturday’s suspension, would have benefited from Apple’s decision to halt sales in the country.
But not all tech companies have bowed to political pressure. South Korean chipmaker SK Hynix has not yet decided to limit supplies (as of this writing). It appears that the South Korean government wants to continue supplying semiconductors to Russia, as it has requested exemptions from the United States for actions that could negatively impact its semiconductor industry.
In addition to more directly imposed restrictions, some Meta and Google services have also been blocked after users hijacked them for political messages. For example, social media users around the world have started using Google restaurant reviews in Moscow and St. Petersburg to send information to Russian citizens.
As a result, new reviews in Russia and Ukraine are now restricted by Google. In other words, Google acted to avoid spreading potential misinformation back and forth. And Meta and Google have restricted some of their location-based services in Ukraine to limit potential military use.
What is the immediate impact?
The actions of Meta and Google, and any loss of ad revenue they previously allowed, will have an immediate but relatively small impact on the Russian state – far less than the impact of direct financial sanctions.
And not being able to use Google Pay or Apple Pay is still not as inconvenient for Russian citizens as not being able to use ATMs, many of which are running out of cash. In contrast, the loss of access to Apple hardware could have a much more lasting impact on Russian consumers.
The overall effect of the various sanctions will be a slowdown in the Russian economy, especially the digital economy which depends on semiconductors. However, this too will have a small immediate impact.
There was no legal or regulatory requirement for chipmakers and technology companies to limit the export of goods and services to Russia. Instead, the move appears to have been prompted by two key incidents.
The first was Ukrainian Deputy Prime Minister Mykhailo Fedorov’s very public and direct appeal to tech companies, asking them to take action. Second, the expectations of the stakeholders had to be met. This can be called “corporate social responsibility” or social license.
Apple and Google have responded to calls for help from members of the Ukrainian government. Google’s philanthropic arm and its employees are directly contributing $15 million to relief efforts in Ukraine. Although US sanctions did not require tech companies to completely stop trading with Russia, signals from US government and Ukrainian officials provided compelling context.
This raised the specter of multinational tech companies deciding which “side” to support based on a stakeholder perspective, rather than a legislated one. It seems that in the end, stakeholder opinions are still the primary driver of Big Tech’s response to ethical dilemmas.
March 07, 2022