Microsoft’s Russian Subsidiary to File for Bankruptcy Amid Operational Exit

Image Source : CNBC

Microsoft Rus LLC, the Russian subsidiary of Microsoft Corporation, has announced its intention to file for bankruptcy, marking a significant step in the company’s gradual withdrawal from the Russian market. The decision follows ongoing geopolitical tensions and economic challenges that have impacted foreign technology firms operating in Russia.

Key Highlights of the Bankruptcy Filing
- The bankruptcy notice was published on Russia’s official Fedresurs registry, confirming Microsoft Rus LLC’s legal proceedings
- Microsoft had previously scaled down its operations in Russia following the country’s invasion of Ukraine in February 2022
- The company ceased new product sales in Russia and restricted access to various cloud-based services, including Microsoft 365 and Azure
- Russian President Vladimir Putin recently stated that foreign service providers such as Microsoft and Zoom should be “throttled” to promote domestic software solutions

Factors Leading to Microsoft’s Exit from Russia
- Western sanctions and regulatory restrictions have made it increasingly difficult for foreign companies to operate in Russia
- Microsoft’s revenue in Russia has declined significantly since its operational scale-back, with earnings dropping from 6.9 billion rubles in 2021 to 161.6 million rubles in 2024
- Legal disputes with Russian corporations, including Severstal and Gazprombank, have further complicated Microsoft’s business environment in the country
- The company’s decision aligns with broader trends of Western technology firms exiting Russia due to financial and political pressures

Future Outlook and Industry Implications
- Microsoft’s exit may accelerate Russia’s push for domestic software development and technological self-reliance
- Other foreign technology firms, including Google, have previously filed for bankruptcy in Russia due to financial constraints and regulatory challenges
- The impact on Russian businesses relying on Microsoft’s services remains uncertain, with potential shifts toward alternative software providers

Source : Microsoft Rus LLC, Reuters, TASS News Agency.