Russian legislators want to cut off international technology companies

July 21, 2014, 12:43 PM UTC
The logo of IBM is seen at their booth p
The logo of IBM is seen at their booth prior to the opening of the CeBIT IT fair on March 5, 2012 in Hanover, central Germany. Brazil is the partner country of the CeBIT 2012, which is running from March 6 to 10, 2012. AFP PHOTO / ODD ANDERSEN (Photo credit should read ODD ANDERSEN/AFP/Getty Images)
Photograph by Odd Andersen—Getty Images

Russian legislators are working to pass regulations that would limit the country’s dependence on U.S.-based technology companies such as Microsoft (MSFT), Hewlett-Packard (HP) and IBM (IBM).

After the U.S. imposed sanctions against some of Russia’s largest companies, the country has been looking at ways to reduce its dependence on foreign technology suppliers.

A new bill being drafted by the State Duma, Russia’s lower house of parliament, would require state-run units to contract with local software and hardware providers, as well as source products that don’t use imported or licensed components, according to a memo obtained by Bloomberg News.

Technology companies are a heightened concern for Russian legislators who say that foreign technology providers could have concealed methods to access confidential data.

U.S. and European technology firms could take a hit. IBM, Microsoft, HP, Cisco Systems (CSCO), Oracle (ORCL) and German-based SAP (SAP) reaped $8.1 billion in combined sales from Russia last year. The vast majority of those revenues came from government and state-controlled companies, according to estimates from the Russian Academy of Sciences included in the memo.

Russia’s legislative move is a response to expanded U.S. sanctions announced last week by President Obama. The new sanctions targeted two major Russian banks, Gazprom Bank and VEB, and two energy companies, Novotek and Rosneft, preventing them access to new medium- and long-term financing in the U.S. The sanctions are an effort to punish Russia for its involvement in the Ukrainian military conflict.

European officials are also considering expanded sanctions, which would build on earlier U.S. and European asset freezes and travel bans following Russia’s annexation of Crimea earlier this year.