All Blogs,Digital Marketing,Media,News, - March 11, 2022
Newsmax: Big Tech, Business Attempt to Punish Russia Could Backfire
A flurry of multinational corporations and U.S.-based Big Tech companies have rushed to declare their own economic war on Russia to punish President Vladimir Putin for his invasion of Ukraine — but some experts fear the offensive will actually embolden the Kremlin.
Since the Ukraine invasion began three weeks ago, a growing number of Western companies spanning various sectors — banking, retail, entertainment, Big Tech — have suspended or completely severed their presence in Russia.
While a spate of stringent international sanctions and the closing of airspace to Russian planes has made it difficult for many companies to carry out business as usual in Russia anyway, Atlanta-based marketing and branding expert David Johnson said many companies opted to withdraw from the region to avoid being seen as supportive or even merely neutral amid the military conflict that’s earned Putin global scorn.
Businesses that opt to cut operations in Russia are currently backed by a majority of Americans and risk losing business in the U.S. and other Western countries if they don’t take a stand. According to a recent Morning Consult survey, more than 75% of Americans support corporations severing Russian business relations.
She points out that when a company decides to sever ties, it is weighing an impact felt by a “range of relevant stakeholders.”
“Contemporary brand management involves recognizing the risk that unpopular or politically incorrect corporate decisions go viral quickly, and can result in social media-fueled boycotts,” Patrick said.
But despite winning consumer support at home, Johnson fears that many companies’ departure from Russia will ultimately hurt ordinary people in the country, and possibly even embolden Putin as the nation loses access and connections to the West.
In response to the growing number of companies pulling out of Russia — a contingent that includes Disney, McDonald’s, Coca-Cola, Pepsi, and Starbucks — Moscow has retaliated by banning U.S.-based social media companies Facebook and Twitter.
While Putin has managed to control nearly all facets of Russian society since taking charge two decades ago, political expression and non-state media reports could still be found on the internet. That access is fading, however, as Putin reacts to decisions made by TikTok, Netflix, Apple, Samsung, and Microsoft to say “dasvidania” to their business in Russia.
YouTube, which is owned by Google, blocked all Russian accounts from making money from their videos and barred Russian state television outlets from being shown across Europe. While YouTube and messaging app Telegram are still available, tech experts predict they could be the next communication apps tossed by Russian regulators.
“Russia is on course, right now, to be North Korea — that isolated,” Johnson said.
Dallas-based digital marketing and tech expert Adam Rizzieri said he agrees that by pulling American Big Tech out of Russia there is a chance that tensions could escalate.
Putin’s efforts to shut down the free press, however, have been “mostly futile,” with hackers interrupting Russian state television to share antiwar messaging and news of Russian war crimes against Ukrainians. Elon Musk has also chipped in, offering uncensored internet from space.
Rizzieri pointed out that, within hours of Russian missiles destroying Ukraine’s internet infrastructure, Musk’s Starlink service arrived on the ground within 48 hours of a Twitter request.
“Without flexing a muscle, Musk used SpaceX to easily, publicly undermine Vladimir Putin,” he said. “Musk has shown how the private sector can be used to mock and undermine global tyrants.”
But if access to the West diminishes, some fear that Russians will fall further victim to Putin’s propaganda, with no other viewpoint present than one which blames the West – and which could ultimately weaken U.S. influence.
To compensate for the missing commerce, Rizzieri said Russia will ultimately develop “government-controlled initiatives” via a “parallel market to try and offer the same goods and services that we enjoy here in the U.S.”
He points out Russia already has Vkontakte, which is essentially just a copy of Facebook.
“Typically, the quality of a knock-off is substandard and the people always find a way to get the real thing,” Rizzieri said. “Somehow, even authentic Levi jeans found their way into Soviet Russia. Socialist markets always allow for a black market to bring in more desirable goods and services.”
Johnson believes companies were forced to take an early stand on the Ukraine conflict because it was “brought into everyone’s living room” via social media.
With the Biden administration initially slow to respond to the growing threat Russia posed to Ukraine, he said multinational companies faced increasing pressure to take a stand from other European countries where they have lucrative contracts.
Rizzieri believes that Ukraine was the “deal breaker” for businesses because the American public “knows that the Biden administration’s weakness makes them directly complicit.”
With Americans seeing a “strong, fearless” leader in Ukrainian President Volodymyr Zelenskyy – who is “standing up to what many see as an evil, calculated Vladimir Putin” – he said there is a desire to back Zelenskyy’s example of “strong” leadership.
The voluntary corporate withdrawal from Russia is also not unprecedented. In the 1980s, 200 major companies pulled out of South Africa in protest of apartheid. At the time, the U.S. slapped South Africa with congressional sanctions.
When a company decides whether to remove itself from a market over geopolitics, Johnson said they are calculating the cost of making an exit, which is why many of the companies that pulled out of Russia still have a presence in China, which has a long track record of committing human rights abuses against its Uyghur Muslim population.
But Rizzieri said the fact that the U.S. “business and political establishment continues to protect China and other countries with questionable track records is not OK.”
“The idea that Americans are comfortable buying oil from Iran is laughable,” he said. “Eventually the private sector has to stand up to the public sector and say ‘enough is enough.'”
But considering Russia is a “basket case for business,” while China boasts one of the “strongest economies,” Johnson said it is a much easier decision for a company to cut a minor loss by leaving the Russian market than to suffer a devastating blow by exiting China.
He said the biggest test will be how companies react if China decides to invade Taiwan.
While businesses are certainly aware of the egregious human rights violations taking place in China, he said “we don’t see [the abuses]” in the same way the Russian war has infiltrated social media feeds nationwide. That is partly because China is digitally isolated from the West, which is what is now taking place in Russia as Putin clamps down.
So, while Russia inspires companies to take a stand for human rights, it’s “business as usual” for businesses with a presence in Beijing.
“The big question is, if China goes into Taiwan, will these businesses do the same then?” Johnson said. “That’s when the rubber hits the road. If China invades Taiwan and their bottom line is affected, how do they react?”
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