How a digital Cold War with Russia could threaten the IT industry

How a digital Cold War with Russia could threaten the IT industry

Summary: What would an escalation of tensions mean for the future of our relationships with Russian software companies, developers, and strategically outsourced tech talent?


All the world's eyes have been on Russia in the last month. The region's hopeful spirit of international peace and cooperation that was evident during the closure of the Sochi Winter Olympics turned to fear and uncertainty when the Ukraine's government ousted its president, Viktor Yanukovych, a close ally of Russian president Vladmir Putin.

This was followed by a referendum and a vote in the Ukraine's Crimea region to secede from its parent country and to rejoin Russia, overturning the former Soviet Union's actions under Nikita Khrushchev to make it part of the Ukrainian Soviet Socialist Republic in 1954.

In the last several days, we've also seen aggressive moves by Russia to send more troops into the region and confiscate Ukranian military bases and assets.

The reaction by the Western world has been total condemnation of Russia's activities. The United States has imposed initial financial, economic, and travel sanctions on Russian officials, which include isolating key Russian financial institutions as well as freezing the US assets of Russian and Ukrainian individuals who were directly involved in the Crimean turmoil.

While the European Union has imposed similar travel bans and asset freezes of key Russian individuals, political realities will likely stop them from imposing wider-range sanctions like those the US is threatening, due to their heavy reliance on Russian natural gas.

While the United States, unlike Europe, is not a major consumer of Russian gas exports, it would be simplistic to say that Russia has no impact on US business at all.

A full-on Cold War with Russia and imposition of the kind of wide-ranging sanctions that we currently impose on Iran and other hostile states would actually have a real and costly impact on the technology industry, should the situation degrade further. 

Let's start with Russian software companies themselves.

Many of these have significant marketshare and widespread use within US corporations. Some of these were founded in Russia, while others are headquartered elsewhere but maintain a significant amount of their development presence within Russia and other parts of Eastern Europe.

If you thought your Y2K mitigation was expensive, wait until your enterprise experiences the Russian Purge.

UK-incorporated Kaspersky Lab, for example, is a major and well-established player in the antivirus/antimalware space. It maintains its international headquarters, and has substantial research and development capabilities, in Russia. It's also thought that Eugene Kaspersky, the company's founder, has strong personal ties to the Putin-controlled government. Kaspersky has repeatedly denied these allegations but questions about the man and his company remain and will be a subject of further scrutiny, particulary as US-Russia tensions escalate.

NGINX Inc., while not even three years old, is the support and consulting arm of an open source reverse proxy web server project that is very popular with some of the most high-volume internet services on the planet. The company has offices in San Francisco, but it is based in Moscow.

Parallels, Inc., is a multinational corporation headquartered in Renton, Washington, that focuses extensively on virtualization technology as well as complex management stacks for billing and provisioning automation used by service providers and private clouds running on VMware's vSphere stack and Microsoft's CloudOS. However, their primary development labs are in Moscow and Novosibirsk, Russia.

Acronis, like Parallels, was founded in 2002 by Russian software developer and venture capitalist Serguei Beloussov. He left Parallels and became CEO of Acronis in May of 2013. The company specializes in bare metal systems backup, systems deployment and storage management software for Microsoft Windows and Linux and is headquartered in Woburn, MA, a suburb of Boston. However, it has substantial R&D operations in Moscow.

Veeam Software led by Russian-born Ratmir Timashev, concentrates on enterprise backup solutions for VMware and Microsoft hypervisor stacks. Like Parallels and Acronis, it is also a multinational. The company maintains its US headquarters in Columbus, Ohio but much of its R&D is based in St. Petersburg, Russia.

Don't go away, there's more on the next page:

Topics: Cloud, Data Centers, Enterprise Software, Security, Software Development


Jason Perlow, Sr. Technology Editor at ZDNet, is a technologist with over two decades of experience integrating large heterogeneous multi-vendor computing environments in Fortune 500 companies. Jason is currently a Partner Technology Strategist with Microsoft Corp. His expressed views do not necessarily represent those of his employer.

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  • Easy solution

    The 'West' should stop meddling in other countries matters. People familiar with world affairs knows that who is behind the various 'arab springs' and 'revolutions' in the former soviet republics.
    • You are not familiar with world affairs

      Just like how Russian cyber-criminals should stop stealing millions of dollars from American companies.

      Funny how countries like Estonia, Latvia, Lithuania, and Poland broke away from mother Russia as soon as they got the chance and joined the EU and NATO to prevent another invasion and occupation. They sure aren't complaining about the extra U.S. fighters being moved there to counter Tzar Putin's bluster.

      For non-Russians: search on "Molotov-Ribbentrop Pact" to understand just what Russians think of Eastern Europe.
    • Why? Is Russia going to do so?

      Russia had been brazenly interfering in the internal affairs of Ukraine and other former Soviet republics for years. Hezbollah was founded in Iran in 1980 and has served as a surrogate for the Iranian government in neighboring countries (especially Lebanon) ever since. There are numerous other examples.

      Advocating that western democracies not intervene is effectively advocating that they cede influence to less scrupulous sorts of states.
      John L. Ries
      • Hezbollah

        Hezbollah came about because of the israeli invasion and occupation of Lebanon. It got some funding by Iran after they showed that they were a force to be reckoned with.
        • Already existed

          Despite the Wikipedia article, I was seeing references to Hezbollah ("the party of God") *before* the Israeli invasion of Lebanon. It is no more an indigenous Lebanese organization than is the Lebanese Baath Party.
          John L. Ries
    • Breakaways

      The people behind these revolutions were locals. They got support from many outside sources, not just the US and Western Europe.
    • Not only are you not

      familiar with world affairs, you seem to be unfamiliar with proper sentence construction.
    • Define the West.

      Where is the border of the West ? Should Russia be OK taking half of the Germany for example ?
      • Good point

        It should be remembered that Kaliningrad Oblast was part of Germany until WWII and was never Russian, or even Slavic before that (the pre-German Prussians were Balts, most closely related to modern-day Lithuanians). As far as I'm aware, the entire Russian population of what had been Northeast Prussia settled there after WWII (the pre-existing German population was forcibly evacuated).

        On the whole, irredentism is a can of worms best left unopened.
        John L. Ries
    • Owl:Net makes a good point

      "Former U.S. Ambassador: Behind Crimea Crisis, Russia Responding to Years of "Hostile" U.S. Policy

      Jack Matlock, Jr., was the U.S. Ambassador to the U.S.S.R. during the George H.Bush administration.
      Rabid Howler Monkey
      • Yay! When I responded to Owl:Net, I got instant votes and flags

        Presumably, inherited from Owl:Net's post.
        Rabid Howler Monkey
    • ? Do they?

      You sound like James Bond. Please let us all in on your secrets.

      You sound full of....well, you know what.

      "People familiar with world affairs knows that who is behind the various 'arab springs' and 'revolutions' in the former soviet republics."

      Uhhhh...I would say yes...yes we do. It seems pretty obvious its the people of those countries. Particularly obvious when you see literally countless thousands of them in the streets risking the lives of themselves and their families to do so. So...given the very very clear cut obvious facts that inescapably exist, it appears that the people behind and infront of these uprisings are indeed the very people who we not only see on our own televisions and the internet, but curiously enough the very same people who at various times have admitted to being behind the efforts and promoting such uprisings.

      "The 'West' should stop meddling in other countries matters"

      Ya. Sure the west should. The west should just let everyone do what they want whenever they want and when the crap really hits the fan, and towers start dropping and lives are lost overseas and the whole world is swirling in the toilet bowl then you can be the BIGMAN who points out how idiotic the west was for sitting around letting anarchy reign in foreign countries as if the U.S.A. was an untouchable island that dosnt exist on the same planet.

      You really do appear to have about as little knowledge of international affairs as a human being could have and still be breathing and in at least a somewhat conscious state.

      You shouldn't even be talking about things you know absolutely nothing about never mind making the bold ludicrous statements you do.
      • While there is some argument that the United States

        Has to intervene occasionally, we more often intervene when we should not. I.E. Vietnam, Korea, Iraq and trying to put the Shah back into power, etc.

        The United States needs to stop using military muscle to make changes and use our words and money to make changes. Which changes due to those latter things are much longer lasting.
  • Who knew that Chicken Little was actually Russian?

    Kaspersky Lab, NGINX Inc., Parallels, Inc., Acronis, and Veeam Software are all minor players in the U.S. IT sector. Kaspersky is somewhat popular in the consumer market, but it has little importance in the IT business because of fears of Russian nationalism. Acronis is more of a problem because its imaging product is popular, but a non-Russian will write a replacement. Symantec bundled its Ghost with other enterprise products.

    Apps aren't important in the IT sector; quit trying to obfuscate the issue. And if we lose Russian apps, then Americans will write some to replace those. Sounds like a win-win to me.

    "Contractor H-1Bs are almost certainly going to be cancelled en-masse" as they should be. Did you notice that Russian nationals were the first ones to storm a Crimean military base -- and killed a Ukrainian warrant officer? We should also cancel all security clearances for Russian and Chinese nationals.

    "We will be almost certainly be dealing with Russian cyberattacks from within the walls of our own companies for years to come" and that's exactly why we need to purge them.

    Anyone who wants to know what Russian nationalists will do to countries and companies who insult mother Russia should search on "Estonia 2007 cyber attacks."

    From my blog
    The U.S. must quickly wean itself off Russian rockets and engines from Tzar Vladimir Putin
    Putin's Russian love / Ukraine's Molotov cocktail parties / Are Estonia, Latvia, and Lithuania next?
    • It would probbly be a boon

      to eliminate all "apps". Applications and programs of substance are what got the industry this far, not snippets of code doing single purpose things best delivered by batch files in many cases.
    • Most likely a different scenario

      The article insinuates that Russia (or the companies themselves) will pull our or block their products from the US. As others have mentioned, this won't be a major blow. I know and have used, to some extent, a number of these packages. However, I'm always searching for better products, and I now use none of them. There is plenty of competition. It would be frustrating to have to change for some, but I imagine, if it became that obvious - that this became a software cold war - that most people in the US would be glad to drop the "enemy's" software.

      That said, I doubt that would even happen. First, they're business owners. Their goal is to make money. These packages are purchased by millions in the US, I'd guess. Blocking that software would likely cost them billions. They won't give that up. Second, there is a greater fear - that they would continue to sell the software, pocket the cash, then use the software to infect the systems. Considering their purposes - antivirus, low-level copying/cloning, etc - they could theoretically first gain access to our data, and then infect or delete it once they had it.

      Most of these are legitmate packages and I'm not suggesting that the malicious ideas expressed would happen. But if you're going to fear the "cold war" impact, then that would be the bigger concern.
    • Baltic countries

      Ukrainization of russian Crimea is a historical casus. Russia have no resources for ex-USSR members. Don't worry. Even funny to read it.
      • Crimea was only Russian since 1783

        Funny how you Russians always forget that you stole it from the Ottoman Empire. Are you going to give it back to Turkey now?
        • Turkey

          :) may be let's drill into the hystory more deeply? I am sure Ottoman Empire is not a original owner or creator of Crimea. And why Turkey? Italy or Greece are pretenders too.
          • Russians are inconsistent

            First you said that Crimea belongs to Russia. Now you say that Crimea belongs to the original owners. Make up your mind; which is it?

            I do not like it when countries invade and occupy other countries on a whim. I do not like the fact that Turkey occupies a good part of Cyprus, that Russia occupies 11% of Finland, that China occupies Tibet, that Russia occupies Crimea, etc.