Sanctions, Piracy, and Losses: Microsoft’s Dilemma in Russia
Following the outbreak of war, companies such as Oracle, Dell, and IBM closed their offices in Russia and ceased providing software and hardware sales. However, under normal circumstances, these companies would continue to offer after-sales services for the duration of their contractual obligations.
Microsoft’s approach differs slightly from the aforementioned companies. Instead of closing its Russian offices, Microsoft has laid off local staff, suspended new sales activities, and continued to fulfill contractual obligations with Russian clients.
Nevertheless, Microsoft has prohibited Russian customers from accessing Windows Update, effectively preventing automatic updates for Windows 10, Windows 11, and Windows Server, although clients can still download and install patches independently.
Microsoft has sent letters to its Russian clients requesting license renewal fees, specifically targeting unsanctioned private Russian enterprises, likely driven by a desire to retain some presence in the Russian market and mitigate losses from piracy.
In response to Western sanctions, Russia has legalized piracy under emergency circumstances related to national defense and security. The law also authorizes the government to seize assets without the consent of patent holders, though this is limited to legal entities from countries imposing sanctions on Russia.
Sanctions and legalized piracy have allowed Russia to obtain licensed copies of various software, with Microsoft claiming a loss of $125 million. The current demand for private clients to renew their licenses stems from this situation, though implementation poses significant challenges.
These difficulties arise from the reluctance of some private companies to pay Microsoft’s licensing fees and the lack of suitable channels for those willing to pay. As a result, Microsoft’s ability to collect licensing fees under these circumstances remains highly uncertain.