Kaspersky Lab Likely Not at Risk in Ukraine Crisis
Speculation is spreading that a Ukraine-Russian conflict and the resulting global diplomatic reaction will disrupt the operations of Russia-based security software company Kaspersky Lab ZAO
Mar 10, 2014
Chances are the political tensions will force operational changes, but the impact won’t be exclusive to Kaspersky and won’t trickle down to the partner level.
Already signs are unfolding that the crisis could come to a swift end as Russia withdraws its troops from the Ukraine border, lowering the likelihood of a full-scale invasion. The garrisoning of formations is a result not of political pressure brought by Washington and Western leaders, but rather investors and global markets.
On the first full business day of the crisis, global markets reacted to the prospects of a war in Eastern Europe. The Moscow stock market lost 11 percent of its value, and the ruble plunged against major global currencies. The Russian central bank was forced to raise interest rates to stave off hyper-inflation.
Today, global and Russian markets are rebounding. The easing of tensions and the prospects of a diplomatic solution to the Ukraine’s future gave investors hope war could be avoided. While it will take time for markets to fully recover, 2 percent to 4 percent gains are a good sign. The undulating indexes show the power markets have over politics.
Some American and European solution providers speculated Kaspersky Lab could suffer if the crisis escalated. A break in East-West diplomatic relations and a return to Cold War posturing could make conducting business with a Russian company challenging. Chances are, the way markets reacted shows the business community won’t allow diplomatic and military communities to prevail.
Here are 8 reasons why Kaspersky isn’t overly exposed in the Ukraine crisis.
1. Markets React Strongly
While the possibility of armed conflict hasn’t passed, the markets have done what Western leaders haven’t been able to do: demonstrate to the Russian hierarchy that they’ll be punished for jingoistic policies.
2. Geographic Distribution and Separation
Kaspersky Lab doesn’t operate as a singular entity. The North America operations has its own management, sales, products and funding. Companies like Kaspersky are set up this way for tax and legal purposes. Management distribution means geographic operations are isolated from disruptions in other parts of the world. In the event of war or sanctions, the North American, South American and European operations would go on like normal.
3. Travel Is Already Difficult
The Obama administration is considering sanctions to limit the travel of Russian businesspeople, the idea being that restricting travel will make commerce harder and pressure the Kremlin. Kaspersky Lab already deals with that. Ever wonder why Kaspersky Lab’s North America partner conferences are always in the Caribbean? Travel. Russians and Americans require visas to enter each other’s countries, and the frequency of travel is limited to a certain number of trips and days per year. For Russians, it’s far easier to travel to Dominican Republic, Bahamas and Mexico than Las Vegas.
4. More About Oil and Gas
Did you know the largest supplier of Europe oil and gas is Russia? Did you know that most of that energy stock flows through Ukraine? This has more to do with the reasons Russia wants a friendly Ukraine than the restoration of Russian Empire. The Russian economy is built on oil and gas, as Russia is the world’s second largest petroleum exporter. The technology sector is a small part of the Russian economy; sanctions will most likely be directed against energy over technology.
5. War is Good for Business
Every two-bit holiday like Valentine’s and Groundhog’s days come with a flood of warnings from security vendors about spam and phishing attacks designed to trick people into giving up credit card numbers. The Ukraine crisis hasn’t, yet. If tensions persist and hostilities break out, we’ll get more than warnings. A digital war will happen, too, as nation-states and sympathetic hackers launch a cyberwar to complement the shooting. In this case, companies like Kaspersky will do just fine. As the old adage goes: War is good for business.
6. Same Effect on Western Companies
While some Americans and Europeans are speculating what impact the Ukraine crisis will have on Kaspersky, there are Russians sitting in a St. Petersburg café speculating how the tensions and sanctions will impact Symantec Corp. and McAfee Inc. You see, whatever happens will impact American and European companies operating in Russian and Eastern Europe. Sanctions and war will lock Western companies out of Russia, unintentionally benefiting companies like Kaspersky.
7. The Internet Knows No Bounds
The Internet wasn’t invented to sell books and post selfies; its original purpose was a redundant and resilient decentralized communications system that could survive nuclear attack. Governments may try to control Internet access and communications, but they can’t eliminate it, as demonstrated by protest movements in Syria, Egypt, Iran and the Ukraine. Tensions may rise, travel may be restricted and commerce may be impeded, but the Internet will allow companies to communicate and operate in the background.
8. Kaspersky and Russia Are Not the Same
Eugene Kaspersky and the company that bears his name are not Russia or President Vladimir Putin. Kaspersky Lab is, without a doubt, a Russian company that personifies the Russian culture, but few would tie Kaspersky so closely to the Russian government or country. Such assertions would be like saying Symantec and its CEO, Steve Bennett, is synonymous with Washington policy.
For now, the greater concern must be what happens to the Ukraine people and whether armed conflict can be avoided. All other possibilities – particularly what happens to a company like Kaspersky Lab – are idle and unfounded speculation.
Already signs are unfolding that the crisis could come to a swift end as Russia withdraws its troops from the Ukraine border, lowering the likelihood of a full-scale invasion. The garrisoning of formations is a result not of political pressure brought by Washington and Western leaders, but rather investors and global markets.
On the first full business day of the crisis, global markets reacted to the prospects of a war in Eastern Europe. The Moscow stock market lost 11 percent of its value, and the ruble plunged against major global currencies. The Russian central bank was forced to raise interest rates to stave off hyper-inflation.
Today, global and Russian markets are rebounding. The easing of tensions and the prospects of a diplomatic solution to the Ukraine’s future gave investors hope war could be avoided. While it will take time for markets to fully recover, 2 percent to 4 percent gains are a good sign. The undulating indexes show the power markets have over politics.
Some American and European solution providers speculated Kaspersky Lab could suffer if the crisis escalated. A break in East-West diplomatic relations and a return to Cold War posturing could make conducting business with a Russian company challenging. Chances are, the way markets reacted shows the business community won’t allow diplomatic and military communities to prevail.
Here are 8 reasons why Kaspersky isn’t overly exposed in the Ukraine crisis.
1. Markets React Strongly
While the possibility of armed conflict hasn’t passed, the markets have done what Western leaders haven’t been able to do: demonstrate to the Russian hierarchy that they’ll be punished for jingoistic policies.
2. Geographic Distribution and Separation
Kaspersky Lab doesn’t operate as a singular entity. The North America operations has its own management, sales, products and funding. Companies like Kaspersky are set up this way for tax and legal purposes. Management distribution means geographic operations are isolated from disruptions in other parts of the world. In the event of war or sanctions, the North American, South American and European operations would go on like normal.
3. Travel Is Already Difficult
The Obama administration is considering sanctions to limit the travel of Russian businesspeople, the idea being that restricting travel will make commerce harder and pressure the Kremlin. Kaspersky Lab already deals with that. Ever wonder why Kaspersky Lab’s North America partner conferences are always in the Caribbean? Travel. Russians and Americans require visas to enter each other’s countries, and the frequency of travel is limited to a certain number of trips and days per year. For Russians, it’s far easier to travel to Dominican Republic, Bahamas and Mexico than Las Vegas.
4. More About Oil and Gas
Did you know the largest supplier of Europe oil and gas is Russia? Did you know that most of that energy stock flows through Ukraine? This has more to do with the reasons Russia wants a friendly Ukraine than the restoration of Russian Empire. The Russian economy is built on oil and gas, as Russia is the world’s second largest petroleum exporter. The technology sector is a small part of the Russian economy; sanctions will most likely be directed against energy over technology.
5. War is Good for Business
Every two-bit holiday like Valentine’s and Groundhog’s days come with a flood of warnings from security vendors about spam and phishing attacks designed to trick people into giving up credit card numbers. The Ukraine crisis hasn’t, yet. If tensions persist and hostilities break out, we’ll get more than warnings. A digital war will happen, too, as nation-states and sympathetic hackers launch a cyberwar to complement the shooting. In this case, companies like Kaspersky will do just fine. As the old adage goes: War is good for business.
6. Same Effect on Western Companies
While some Americans and Europeans are speculating what impact the Ukraine crisis will have on Kaspersky, there are Russians sitting in a St. Petersburg café speculating how the tensions and sanctions will impact Symantec Corp. and McAfee Inc. You see, whatever happens will impact American and European companies operating in Russian and Eastern Europe. Sanctions and war will lock Western companies out of Russia, unintentionally benefiting companies like Kaspersky.
7. The Internet Knows No Bounds
The Internet wasn’t invented to sell books and post selfies; its original purpose was a redundant and resilient decentralized communications system that could survive nuclear attack. Governments may try to control Internet access and communications, but they can’t eliminate it, as demonstrated by protest movements in Syria, Egypt, Iran and the Ukraine. Tensions may rise, travel may be restricted and commerce may be impeded, but the Internet will allow companies to communicate and operate in the background.
8. Kaspersky and Russia Are Not the Same
Eugene Kaspersky and the company that bears his name are not Russia or President Vladimir Putin. Kaspersky Lab is, without a doubt, a Russian company that personifies the Russian culture, but few would tie Kaspersky so closely to the Russian government or country. Such assertions would be like saying Symantec and its CEO, Steve Bennett, is synonymous with Washington policy.
For now, the greater concern must be what happens to the Ukraine people and whether armed conflict can be avoided. All other possibilities – particularly what happens to a company like Kaspersky Lab – are idle and unfounded speculation.