Kaspersky Lab, a prominent Russian cybersecurity company and antivirus software provider, announced that it will begin shutting down its operations in the United States starting on July 20, 2024.
This decision follows a series of stringent sanctions imposed by the U.S. government, reflecting heightened tensions and regulatory actions against companies perceived as national security risks.
In an official statement to BleepingComputer, Kaspersky Lab confirmed its decision to shut down and the consequent layoff of its U.S.-based employees. Independent cybersecurity journalist Kim Zetter noted that this move would affect fewer than 50 employees in the United States.
Tekedia Mini-MBA edition 15 (Sept 9 – Dec 7, 2024) has started registrations; register today for early bird discounts.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
The closure is directly linked to sanctions imposed by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), which targeted twelve Kaspersky Lab executives on June 21, 2024. These sanctions froze the executives’ U.S. assets and barred their access until the sanctions are lifted.
Additionally, the U.S. Department of Commerce designated AO Kaspersky Lab, OOO Kaspersky Group (Russia), and Kaspersky Labs Limited (United Kingdom) to its Entity List. This designation effectively prohibits any U.S. business from engaging in transactions with these entities.
“Russia has shown it has the capacity – and even more than that, the intent – to exploit Russian companies like Kaspersky to collect and weaponize the personal information of Americans,” Commerce Secretary Gina Raimondo stated in June.
The prohibition, which takes effect on July 20, will prevent the sale of Kaspersky software to new customers in the US.
The Bureau of Industry & Security (BIS) stated that the decision followed a comprehensive investigation which concluded that Kaspersky’s continued operations in the United States posed a national security risk. The BIS emphasized the potential for the Russian government to influence or direct Kaspersky’s operations, which could not be mitigated through measures short of a total prohibition.
“Today’s Final Determination and Entity Listing are the result of a lengthy and thorough investigation, which found that the company’s continued operations in the United States presented a national security risk—due to the Russian Government’s offensive cyber capabilities and capacity to influence or direct Kaspersky’s operations—that could not be addressed through mitigation measures short of a total prohibition,” stated the Bureau of Industry & Security.
Following these regulatory actions, the Department of Commerce’s BIS banned Kaspersky from selling its software and delivering antivirus updates in the U.S., effective September 29, 2024. This ban underscores the severe cybersecurity risks that U.S. authorities associate with the continued use of Kaspersky products and services.
In response to these escalating restrictions, Kaspersky announced its decision to shut down its U.S. operations. The company said that the Biden administration’s actions had rendered its business in the United States “no longer viable.”
A Kaspersky spokesperson elaborated on this in a statement to BleepingComputer saying: “Starting from July 20, 2024, Kaspersky will gradually wind down its U.S. operations and eliminate U.S.-based positions.
“The decision and process follow the Final Determination by the U.S. Department of Commerce, prohibiting the sales and distribution of Kaspersky products in the U.S. The company has carefully examined and evaluated the impact of the U.S. legal requirements and made this sad and difficult decision as business opportunities in the country are no longer viable.”
The Implications for the U.S. Market and Kaspersky
The U.S. government’s firm stance against Kaspersky Lab reflects broader shifting geopolitical tension involving China and Russia. The sanctions and subsequent shutdown of Kaspersky’s U.S. operations highlight the increasing scrutiny and regulatory measures the U.S. is willing to implement against companies from nations it deems hostile.
This approach is indicative of a larger strategy to protect national security by limiting the influence and operational capacity of foreign entities that could potentially compromise American infrastructure and data.
By targeting Kaspersky, the U.S. is sending a clear message that it will take decisive actions against companies with ties to adversarial governments, particularly in the tech and cybersecurity sectors. This stance has intensified since the enactment of the CHIPS and Science Act, augmented by “Guard Rails” designed to protect American tech capacity.
However, the move could lead to heightened tensions and a further decoupling of technology ecosystems between the U.S. and countries like Russia and China. The implications for other companies from these nations are significant, as they may face similar scrutiny and restrictions, affecting their global operations and market access.
Against this backdrop, Kaspersky Lab, once a leading name in the industry, will now have to contend with the challenges of losing a major market. This could affect the company’s revenue streams, research and development capabilities, and overall competitive standing in the global cybersecurity market.
Moreover, U.S. consumers and businesses that relied on Kaspersky’s products will need to seek alternative solutions, potentially leading to disruptions and increased costs as they transition to new cybersecurity providers.
Kaspersky said “the primary impact of these measures will be the benefit they provide to cyber crime,” adding that “international cooperation between cyber security experts is crucial in the fight against malware, and yet this will restrict those efforts.”