Silicon Valley tech giants are joining the rest of the business world in pulling their products and services out of Russia. Companies like Apple (AAPL) cut ties with the Russian market entirely in protest of the invasion of Ukraine, while companies like Youtube (GoogleAnd the Google), dead (FB), And the Microsoft (MSFT) limits the availability of Russian propaganda networks such as RT and Sputnik in Europe.
And while the moves of the big tech companies put at least some pressure on Russian President Vladimir Putin and provide assistance to Ukrainian citizens, they could also be a boon to corporate profits. And for companies mired in controversy, action against Russia could improve its standing among consumers.
“We want to think this is altruistic and companies take a stand, but sometimes that’s also good for the laundry,” Forrester chief analyst Alla Valenti told Yahoo Finance. “In other words, if a brand has some bad media or publicity, they can do that to try and repair their brand reputation.”
better than harm
Among the major technology brands, Apple is taking the strongest position against Russia. The company has halted all sales of products in the country, limited services like Apple Pay, removed the RT and Sputnik apps from the App Store everywhere except within Russia, and halted live traffic and accidents in Apple Maps to prevent Russia from seeing where Ukrainian citizens can congregate.
Apple does not have any physical stores in Russia, which means that its products are sold through third-party retailers. And according to Wedbush analyst Dan Ives, cutting Russia off device sales won’t have much impact on Apple’s earnings.
“Russia in general is the breadcrumb in terms of its financial impact on the tech giants in the United States,” Ives told Yahoo Finance. “If FAANG names succeed in stopping doing business in Russia, the cap will be 1%-2% of total revenue exposure.”
Apple has always made human rights one of the cornerstones of its appeal, even if at times to its detriment. The Department of Justice famously opposed when investigators demanded that Apple create a backdoor for iOS to gain access to the iPhone used by a killer in the 2015 San Bernardino terrorist attack.
Apple protested the request, saying that building a backdoor would create a vulnerability in every iPhone on Earth that hackers could quickly find and exploit.
“It’s a brand that has drawn a line in the sand about what they stand for and what they don’t stand for,” Valente said. “And when you’re driven by these kinds of demarcations, it makes it…more clear to see the path you want to take.”
Of course, Apple, along with other tech giants, do not have a track record. The company is best known for selling and manufacturing its products in China, which has been accused of human rights abuses including incarceration of Uyghurs in internment camps in Xinjiang.
In general, the brands that stand with Ukraine should benefit from the positive attention they receive, and can attract new customers who choose the companies they do business with based on their morale.
Big Tech’s moves will retain employees and attract talent
In addition to keeping customers happy, tech companies’ actions against Russia can also raise employee morale and serve as a powerful recruitment tool for future employees.
Employee activism is a major force in Silicon Valley, leading companies like Google to shy away from some military contracts. Companies certainly understand this and want to make sure their employees are happy by supporting Ukraine.
“Think about if you have big people or significant people or a certain talent that said, ‘You know, we as employees no longer fit in with this brand that we work for, and we’re going to leave. I mean, this could be a huge problem for tech companies,” Valente said.
It’s not just about current employees. Tech companies need to make sure they are on the right side of the struggle if they are to continue attracting the best talent, especially at a time when there are more jobs than there are available labor.
Tech companies are almost certain to take a stand against Russia, because their CEOs feel this is the right thing to do in the face of an unjustified invasion. However, they are also likely to realize that doing so has tangible benefits for themselves.
However, it will be interesting to see which companies continue to hold their positions if the war continues for months or years, and whether they will feel the same then as they do now.
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