The US Treasury has broadened sanctions against Russian businesses, banning certain IT services provided by American companies to Russian clients. These encompass cloud services, design software, enterprise management solutions and IT consulting services. The restrictions will be effective from September 12, 2024.
However, US authorities maintain that they support the free spread of information globally, and the new sanctions are “not aimed at undermining the civil society.” Russian analysts interviewed by “Vedomosti” largely agree with this stance, asserting that the sanctions will not affect domestic consumers. Along with the new sanctions, the Treasury’s Office of Foreign Assets Control has issued two general licenses allowing continued cooperation with Russian legal entities in various IT areas.
The first license allows American companies to export and re-export services related to internet-based communication, such as instant messaging, email, social networking, photo and movie exchange, web browsing, blogging, collaboration platforms, video conferencing, electronic gaming, e-learning platforms, automatic translation, web maps, user authentication services, web hosting, and domain name registration, according to Lomonosov Moscow State University. The second license authorises the updating of software for medical equipment and devices.
Therefore, the day-to-day lives of Russians will only be slightly affected as they will be able to perform all familiar activities: web surfing, registration on foreign websites, using email on foreign domains, educational platforms, and web conferencing services. The new sanctions will also not impact user devices operating on Android and iOS.
However, Russian companies that rely on foreign software may face difficulties. For instance, the new sanctions could impact the execution of existing contracts if foreign partners are subject to sanction prohibitions, in which case the refund would depend upon who placed the order: the end user or an intermediary. If the latter, the responsibility may fall on the intermediary: Russian courts rarely accept sanctions as a force majeure circumstance.
The development of Russian alternatives to foreign software is in full swing, although fully functional replacements for some products still don’t exist, and migration turns out to be a complex task. For example, “1C” started the migration of SAP business processes onto its own platform in the summer of 2022. Replacing design software – CAD or CAM, the world’s largest suppliers being American Autodesk and French Dassault Systеmes, is not always possible. Comprehensive Russian counterparts for these solutions are expected to appear by 2030.
