Kaspersky Closing U.S. Operations Due to Software Ban

Kaspersky is shutting down its U.S. operations and laying off all associated workers in response to the Biden administration’s software ban in the United States.

The Biden administration announced the software ban last month, citing "undue and unacceptable" risks to national security, and to the security and safety of U.S. citizens. The U.S. Department of Commerce’s final decision prohibits Kaspersky, based in Russia, and its affiliates from doing business in the United States. This makes it illegal to sell, integrate or license any Kaspersky software on national security grounds.

The software ban, which applies to consumers, government and business organizations, includes new sales and agreements with Americans after July 20, and new security software updates after Sept. 29.

Kaspersky denies being a national security threat.

Kaspersky Investigated Potential Impact of Software Ban

A few days after the software ban was announced, Kaspersky said it was investigating the potential impact on the business of its U.S. partners, “whose business and trust over almost 20 years we greatly appreciate.”

Kaspersky sent us the following statement:

“Starting from July 20, 2024, Kaspersky will gradually wind down its U.S. operations and eliminate U.S.-based positions. The decision and process follows the final determination by the Department of Commerce, prohibiting the sales and distribution of Kaspersky products in the U.S.”

Kaspersky said it has been operating in the United States for close to 20 years, “contributing to the nation’s strategic cybersecurity goals by safeguarding organizations and individuals in the country from ever-evolving cyber threats.”

“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 company said. “Kaspersky’s business remains resilient, and our key priority remains the same — to protect our customers in any country from cyberthreats. Being a global cybersecurity vendor, the company will continue investing in strategic markets, and remain committed to serving its customers and partners and ensuring their protection.”

Kaspersky said its interpretation of the final determination, supported by the assessment of an external U.S. law firm, indicates that the determination does not prohibit any U.S. person from participating in sales of Kaspersky’s products and services, provided that these U.S. persons are not users or consumers of Kaspersky products or services themselves. Therefore, Kaspersky believes that a U.S. person distributor may engage in purchases and/or resales of Kaspersky products to end-customers outside the United States who are not U.S. persons. Kaspersky has also communicated this understanding to the Department of Commerce regarding the department’s authority to regulate such transactions, and it hopes to receive additional guidance from the department shortly.

Minimal Competitive Impact

Eric Parizo, managing principal analyst at Omdia, which shares a parent company with Channel Futures (Informa), said the move is hardly a surprise following the Department of Commerce banning the sale of Kaspersky software in the United States as of July 20.

"It will have minimal competitive impact, as Omdia research indicates Kaspersky’s market share in North America had already become nonmaterial," he said. "Not long ago, North America represented as much as 20% of Kaspersky’s revenue specific to certain segments, such as security awareness training, but since sanctions were enacted in 2022 due to Russia’s involvement in the war in Ukraine, Kaspersky’s North American revenue has quickly evaporated."

More broadly, Kaspersky’s business remains troubled globally due to its inescapable association with Russia and its alleged relationship with the Russian government, in particular its intelligence services, Parizo said.

"Short of reestablishing the company outside of Russia, it has little choice but to endure and hope to whether the geopolitical storm," he said.