A subsidiary of Microsoft Corporation in Russia, Microsoft Rus LLC, is preparing to file for bankruptcy, according to a Reuters report released recently. The move comes as tensions continue to escalate between the Russian government and Western tech companies in the wake of the Ukraine conflict.

Earlier this week, Russian President Vladimir Putin stated that foreign service providers such as Microsoft and Zoom should be “throttled” to make space for domestic alternatives.

While Microsoft Rus LLC has been one of the company’s main operational arms in Russia, the implications of the bankruptcy on Microsoft’s other Russian units—Microsoft Development Centre Rus, Microsoft Mobile Rus, and Microsoft Payments Rus—remain unclear.

This development marks a further retreat of Western technology firms from Russia, following Microsoft’s 2022 announcement to drastically reduce its operations in the country. That decision was attributed to economic instability and increasing difficulty in sustaining business amid ongoing geopolitical tensions.

After Russia’s full-scale invasion of Ukraine in February 2022, Microsoft took steps to align with global sanctions and regulatory responses, including cutting ties with Russian state media, removing RT’s apps from the Windows App Store and halting related advertising.

Microsoft’s bankruptcy move follows a similar one by Google’s Russian entity in 2022. In that year, the company was forced to file for bankruptcy after Russian authorities frozen its bank accounts, leaving it unable to meet local financial obligations.

Microsoft’s latest decision signals not only the economic impact of geopolitical conflict but also the broader retreat of Western companies as Russia increasingly pivots toward digital autonomy.