This article was previously published by Coda Story.
By Alan Deutschman
In March 2015, when the Republican governor of the state of Indiana, Mike Pence, signed a so-called “religious freedom” law that would permit businesses to refuse to serve gay customers, his action provoked a fierce response from corporate leaders clustered halfway across the continent on the West Coast. The San Francisco billionaire Marc Benioff, whose Salesforce.com had paid $2.5 billion only two years earlier to buy a software company with 2,000 employees in Indianapolis, took to Twitter for his salvo: “Today we are canceling all programs that require our customers/ employees to travel to Indiana to face discrimination,” he declared.
Soon Benioff joined together with 70 other top executives of technology companies—including Airbnb’s Brian Chesky, Netflix’s Reed Hastings, Microsoft’s Satya Nadella, and Cisco’s Gary Moore—to sign a statement opposing the legalization of LGBT discrimination. And Apple’s openly-gay CEO, Tim Cook, published an opinion column in the Washington Post to let people know “around the world” that “regardless of what the law might allow in Indiana … we will never tolerate discrimination.” Cook concluded: “Opposing discrimination takes courage. With the lives and dignity of so many people at stake, it’s time for all of us to be courageous.” Days later, Salesforce.com’s top executive in Indiana stood by the side of the legislature’s recalcitrant Republican leaders as they announced a new law clarifying that the state’s “religious freedom” act didn’t condone discrimination based on gender.
The quick, decisive victory in Indiana resonated worldwide, and the news inspired the hopes of Russian activists that America’s progressive techno-moguls would finally speak up against Vladimir Putin’s anti-gay laws. But the Silicon Valley leaders still haven’t summoned nearly enough courage for that much tougher fight.
An American sales executive traveling today to Moscow—where the state sanctions persecution and condones violence against LGBTQ people—could nonetheless patronize many of the same brands that serve him in San Francisco or Seattle or New York City, including the companies that forcefully opposed the Indiana law: He could stay at an Airbnb apartment rental in Moscow, which has emerged as one of the service’s top markets worldwide. (Airbnb has a Moscow office with several employees and owns a small Russian design firm.) The traveler could get chauffeured around town by Uber drivers, drink lattes from Starbucks, stream video on Netflix, and buy an iPhone or iPad or MacBook at a retail shop or order one directly from Apple’s Russian-language online store. (Apple has sold more than 1 million iPhones a year in Russia.) He could search for sales leads and contacts and gauge customers’ attitudes in Russia using Salesforce.com’s “social listening software.” If he was conducting business with the Russian government, he would surely encounter bureaucrats using PCs that ran on Microsoft Windows operating system and were networked by routers made by Cisco, which is under investigation by the U.S. Justice Department and Securities and Exchange Commission for allegedly masterminding a massive scheme of kickbacks and bribes to secure contracts with Russia’s government, military, and intelligence operations.
America’s progressive companies have remained conspicuously silent about Putin’s anti-gay laws while they’ve continued to pursue Russia’s marketplace. As influential as the Silicon Valley titans might seem in their home country, where local officials crave the investment and employment opportunities they can bring, they’re facing a precarious situation in Russia, where Putin has become increasingly antagonistic towards them over the past several years. His regime has cracked down on Internet companies in its efforts to suppress free speech and political opposition. Last year it began requiring that foreign companies operating in Russia keep their data on servers on Russian soil, where the government can access it. In response Google shuttered its research and development operation in Moscow, moving an estimated 50 to 100 engineers overseas. Microsoft relocated its Skype development team from Moscow to Prague, and Adobe pulled all its employees.
Google, which rivals Russia’s homegrown Yandex in the Internet search business there, appears to have flaunted Russia’s data server law or at least delayed taking action so far. (Google as well as Facebook and Twitter were granted vague extensions). But Uber and eBay are reportedly following the new regulations, and the Russian business daily Kommersant has reported that even Apple is complying, too. If this is true—Apple hasn’t commented publicly on the matter—then Putin’s regime could gain access to Russians’ personal troves of photographs and videos and text messages and find what they’ve been reading and listening to and watching. Such a capitulation would represent a perilous strike against the privacy of all of Apple’s Russian customers, and it would be especially dangerous for LGBTQ people there.
Only a few years ago Russia was courting America’s top technology companies rather than fighting them. In 2010 President Dmitry Medvedev visited the corporate headquarters of Apple and Google in Northern California. On his mission he talked up his plans for Russia’s ambitious effort to create its own version of Silicon Valley: the Skolkovo technology park development on the outskirts of Moscow. Medvedev succeeded in enticing leading American venture capital firms to commit to invest in this nascent technology “hub,” which was planned for 100,000 workers.
But the Silicon Valley-Moscow alliance began splintering in early 2014, when the Human Rights Campaign, a prominent American gay-rights advocacy organization, called on the official sponsors of the Winter Olympics in Sochi to protest Putin’s anti-gay laws. Sponsors such as McDonald’s and Coca-Cola refrained from explicitly addressing the issue, but the activists’ agitation helped to elicit gestures of support from a couple of major technology companies: AT&T, a longtime sponsor of the U.S. Olympic Committee (though not of the Sochi winter games), issued a statement on its blog, and Google recast its homepage logo with illustrations of Olympic athletes superimposed on the colors of the rainbow flag.
But the real fissure came soon after the Olympics, when Russian forces annexed Crimea and America’s technology companies complied with the U.S. government’s sanctions against the invader. Russia’s current “Internet czar,” German Klimenko, who is pushing for a steep hike in taxes on American technology companies, recently told Bloomberg BusinessWeek that this compliance marked a “point of no return” for Russia’s relationship with Silicon Valley firms.
In April 2014, Putin appeared on Russian television and claimed that the Internet had begun as a “CIA project” and remained a tool for the American intelligence agency. Months later, in October, when Apple’s Tim Cook came out as the first openly-gay chief executive officer of a Fortune 500 company, the news provoked a backlash from the Russian establishment. Vitaly Milonov, a member of parliament who helped instigate the nation’s anti-gay laws, called on Russia to bar Tim Cook from ever entering the country: “What could he bring us? The Ebola virus, AIDS, gonorrhea? They all have unseemly ties over there. Ban him for life.” And a monument to the late Steve Jobs, which enshrined the entrepreneur’s image on 6-foot-high replica of an iPhone, was dismantled and removed from a college in St. Petersburg, where it had been erected by a consortium of Russian companies.
Apple and Cook himself never commented publicly about this harassment, and soon after the company pushed ahead and aired its first-ever commercials on Russian television. Since then Apple hasn’t responded to any of the ongoing Russian attacks against its gay-friendliness.
The company ignored Russian government member Alexander Staravoitov’s accusation that it was spreading “gay propaganda” by offering U2’s album “Songs of Innocence” as a free download for customers who upgraded their operating systems. And Apple remained silent when the Russian media reported last September that the Russian police were investigating it for promulgating “gay” emojis depicting same-sex people holding hands and kissing.
Putin’s antagonism to Silicon Valley has been costly to Russia’s economic aspirations. American venture capital investors have been pulling their funding, and tech startups have been fleeing the country. And the Skolkovo tech hub outside Moscow has peaked at only around 25,000 workers, a fraction of Medvedev’s grand aspirations.
Because of Putin’s hostility to foreign technology companies, he may be losing one of the most promising opportunities to diversify Russian industry beyond its heavy reliance on natural resources. The economy has suffered greatly from the sharp declines in oil prices, but Putin’s regime hasn’t relented.
Silicon Valley companies are less likely to take the risk of agitating for gay rights in Russia when they no longer have employees on the ground there. Salesforce.com provided a statement to Coda Story that partially explains the seeming inconsistency between its activism at home and its absence on LGBT rights in Russia. “Last year we took a public stance in Indiana because our employees there brought the issue to our leadership,” said the statement. But while the company sells software for tapping the Russian market, it doesn’t actually maintain an office with employees in Russia who could demand action from headquarters in San Francisco. (Apple, Airbnb, and Starbucks, which do have employees in Russia, didn’t respond to requests for interviews.)
Even though the Silicon Valley companies have been closing local offices and bringing home their engineers from Russia, they’re still competing relentlessly for market share in an emerging economy that already has 84 million Internet users. Unless they’re willing to risk losing access to Russia’s large and promising marketplace, the Silicon Valley moguls will ultimately have to play by Putin’s rules. And that means it’s unlikely that their crusade for gay rights will extend to Moscow or St. Petersburg. If anything, their acquiescence to Russia’s insistence on storing all data within Russia will do even more to imperil the persecuted LGBTQ population.
Alan Deutschman is a professor and the Donald W. Reynolds Chair of Business Journalism at the University of Nevada.
[Photo courtesy of William Murphy]