Microsoft's Russian subsidiary to file for bankruptcy

Microsoft Rus LLC, a subsidiary of Microsoft in Russia, plans to file for bankruptcy, according to a statement in the official Fedresurs registry on May 30.

Microsoft has not yet responded to requests for comment.

This follows Microsoft’s June 2022 announcement to reduce operations in Russia due to economic changes and Moscow’s invasion of Ukraine.

The company also removed apps of Russian state-owned media outlet RT from the Windows App Store and limited ads on state-sponsored media.

The impact on other Microsoft Russian units, such as Microsoft Development Centre Rus, Microsoft Mobile Rus, and Microsoft Payments Rus, remains uncertain.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Russia’s tech sovereignty strategy drives out Western giants

Microsoft’s bankruptcy filing follows a consistent pattern of Russian policy to reduce foreign tech influence and promote domestic alternatives.

Russia implemented laws in 2021 requiring foreign tech companies with over 500,000 daily Russian users to establish local legal entities by January 2022, with penalties including service blocks for non-compliance 1.

This push for digital sovereignty isn’t isolated. Google’s Russian subsidiary filed for bankruptcy in 2022 after authorities seized its bank account, making local operations untenable 2.

The Russian government has explicitly positioned foreign tech as a threat, with Putin’s recent statement about “throttling” Microsoft and Zoom aligning with a years-long strategy to assert control over the country’s digital infrastructure.

Since 2021, Russia has been testing capabilities like Deep Packet Inspection technology to monitor and control internet traffic selectively, allowing the government to throttle services like Twitter in response to non-compliance with content removal requests 3.

2️⃣ Chinese tech firms fill the void left by Western exodus

As Western tech companies retreat from Russia, Chinese alternatives have expanded their market presence.

Chinese electronics have become more prominent in Russia, with Huawei smartphones leading the market since 2015 and capturing a significant share of smartphone sales 4.