Analyst: Only a matter of time before US cloud companies shut down services in Russia

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A wave of tech companies — including Amazon, Microsoft and Google — are halting sales of services and products in Russia in response to the country’s invasion of Ukraine and resulting government sanctions.

Experts now say US tech giants could go one step further and cut off access to Russian companies using their cloud computing services.

“We believe it’s a matter of when and not if this will happen as Amazon, Microsoft, Google and Oracle are heading down this path,” Dan Ives, an analyst at Wedbush, told GeekWire. “With the atrocities being witnessed, tech companies have a clear moral choice if they pull the plug on Russia.”

Stopping sales within a country is one thing. Cutting off access to crucial internet services is another.

“Cutting off Russia from Western internet opportunities, be it Office 365 or Amazon Web Services, would very likely have a severely crippling effect, at least in the short term,” said Alexander Gounares, CEO of Bellevue, Washington-based security technology company Polyversum.

It is something that is requested by Mykhailo Fedorov, the minister of digital transformation and deputy prime minister of Ukraine.

“Suspending the provision of AWS services in the Russian Federation will support a global unified motion by many governments and companies that have chosen long-term stability and growth over potential temporary profit losses,” Fedorov wrote in a letter to Amazon. founder Jeff Bezos.

@JeffBezos @Amazon , the bloody Russian aggression continues. The world must join forces against Russian missiles and tanks that are bombing kindergartens and hospitals in Ukraine. Stop the war – stop your services for RU!

— Mykhailo Fedorov (@FedorovMykhailo) March 4, 2022

It’s technically possible for companies to shut down a customer’s cloud connectivity, said S. “Soma” Somasegar, president at Madrona Venture Group who previously led Microsoft’s developer division.

But the way to define a Russian company is unclear, and the process of blocking them is uncertain.

“What is a Russian company? Property? Source of money for investors? IP address of someone connecting?” said Corey Quinn, chief cloud economist at The Duckbill Group. “They would generally go by billing address and payment instrument. ‘Block Russian credit cards’ is the easy pass.”

Amazon Web Services has no data centers, infrastructure or offices in Russia. The largest customers in Russia are companies headquartered outside the country, Amazon said in a blog post Friday.

Yet, for example, one of its customers is Condé Nast Russia. Would Amazon deny that company access to its cloud services, ultimately rendering its operations useless?

Amazon and others may face backlash. After internet provider Cogent Communications said on Friday it was shutting down service in Russia, some criticized the move. Russia itself has already blocked Facebook and limited twitter

WTF convincing? By cutting off Russians access to the Internet, they are cut off from sources of independent news and the ability to stage anti-war protests. Don’t do Putin’s dirty work for him.

— Eve (@evacid) March 4, 2022

Gounares said it’s important for Russian people to get the truth — and cutting off internet services could hinder that.

“If there is a lasting peace, I think it will come from the Russian people themselves,” he said. “And the more Russian citizens get access to the truth about what’s going on, the better off we’ll be.”

Tech companies are in uncharted territory, Quinn said. “The world was not so connected and dependent on a small number of companies in previous conflicts,” he said.

Amazon, Microsoft and Google published blog posts this week highlighting how their cloud and security technology is helping Ukrainian entities fight cyber-attacks.

In its post, Amazon, which does not operate an e-commerce company in Russia, detailed its terms of service for AWS.

“AWS has clear terms of service that if a customer uses AWS services to threaten, incite, promote, or actively encourage violence, terrorism, or other serious harm to others, they may not use our services,” it said. the blog post. noted. “Any customer we know who engages in this type of behavior will have their access to AWS suspended.”

Stopping cloud services for every customer hurts profits for cloud companies. But it would have a “worst case impact of 1 to 2% on revenue,” Ives said in a report to investors, as the Russian-based usage accounts for a small portion of their overall business.

Amazon and Microsoft declined to comment on this story.

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