Sanctions May Harm eCom SaaS Tech

Ecom Depends on Ukraine and Belarus
February 25, 2022

If you have a Shopify App, or an Adobe Commerce plugin that has ties to Belarusian or Ukrainian-based technology company, take heed. You may soon need to find a replacement for that technology due to new, and forthcoming, sanctions.

The well-being and the livelihood of those Ukrainians affected by the conflict, and the innocent Belarusian and Russian citizens who have nothing to do with the invasion, are our deepest concerns here at Future Commerce. But the attention of Western businesses who have technological dependencies on apps based in Eastern Europe will soon turn to that of risk mitigation, assessment, audit, and replacement. 

Here’s why:

The background on sanctions

The U.S. Commerce Department, in cooperation with the Department of State, and the Bureau of Industry and Security, have instituted sweeping sanctions against Russia in response to their invasion of Ukraine. The sanctions, or Export Administration Regulations (EAR), tighten exports on companies doing business with Russia. Existing, similar, sanctions also govern Belarusian financial institutions due to their material support of the war.

While it currently covers exports, more aggressive restrictions are placed on software and technology businesses — including a section on not maintaining software updates to civil end-users. This may cause domestic corporations like Microsoft to control the access to code management platforms like Github and cloud platforms like Azure to businesses dealing in technology with Russia or its allies.

Corporations that provide user experience and feature functionality for eCommerce sites are located in Belarus and Ukraine. The trend began 15 years ago with a large Open Source  legacy, and a strong LAMP-stack foothold in Poland, Belarus, and Ukraine. Around that population of labor, businesses that powered Magento and WordPress stores, like Aheadworks and Amasty, grew up and eventually began to power the larger footprint of cloud-enabled eCommerce. Many operate on private clouds and bare metal licensing services, some of which may exist within Eastern European borders.

Who is impacted 

Eastern Europe is home to a large population of technology businesses and a highly-skilled workforce that power a non-trivial amount of eCommerce, on which Shopify, Adobe, BigCommerce, and Salesforce implementations depend. 

Today, those businesses have workers directly in harm’s way. I myself have colleagues at Rightpoint who are employed nearby to Kyiv. What’s worse, even those outside the immediate area of conflict, in neighboring cities and states like Minsk, Belarus, may be impacted by new sanctions imposed by the U.S. and other countries in response to Russian aggression.

From here sanctions only tighten. The longer Russia plays the aggressor, the more restrictive it will become to do business with Belarusian companies. Should Kyiv fall, a new Russian-governed Ukraine itself may become subject to sanctions. What does this mean for U.S.-based eCommerce businesses? If you have a plugin or app you may be at risk.

We’ll continue to monitor, and pray for the well-being of those in harm’s way and for a swift end to the conflict.

— Phillip

No Off-Label Use. What do Botox and Patreon have in common? They both have novel off-label uses. Ukrainian NGO, Come Back Alive, raised over $300,000 dollars on Patreon to provide equipment to the Ukrainian army. Patreon suspended the page, citing they “[do] not allow any campaigns involved in violence or purchasing of military equipment, regardless of their cause,” and stating that money in the account will be refunded to contributors. Ukraine’s central bank has suspended electronic cash transfers, and the use of cryptocurrency as an alternate source of war funding is on the rise, causing a brief spike in crypto prices.

More Sights & Sounds. Alloy Automation raised $20 million in Series A funding. Icon raised $185 million, and is approaching a valuation of $2 billion. Meta is working on a universal language translation system, an initiative referred to as “No Language Left Behind.” Google is lifting covid protocols at U.S. offices, bringing back its former perks like massages. Kia has released a virtual synthesizer instrument. Yeah, that Kia… 2014 hamster commercial Kia. And Allbirds’ inventory is piling up, so they’re going to wholesale to liquidate. Also, they’re raising prices due to inflation.

All Day I Dream About Supermodels. Gucci has collabed with Adidas and the joint collection debuted on Milan’s runway today. Meanwhile, rumors are circulating that LVMH is exploring the idea of acquiring Ralph Lauren.

Futuristic Toe Shoes Are Still Toe Shoes. German architect, Stephan Henrich, has designed a 3D printed sneaker for Sintratec called “The Cryptide Sneaker.” From the unique look of them, wearers will be sure to leave behind an interesting paw print. 

Sophisticated Soda. Pepsi is classing up the cola world with its new Nitro Pepsi. By using a similar gadget as canned Guinness, the beverages should deliver that dreamy frothy texture we know to be nitro. The drinks will be available in the U.S. at the end of March.

Nuggets v. Inflation. Burger King is dealing with chicken supply chain issues by reducing the number of nuggs in meals, rather than raising prices more. The Whopper has also been taken off the discounted menu to offset inflating cost of goods.

Ukraine’s role in the global economy. Around 13% of global corn and 12% of wheat comes from Ukraine. Shipping operations are beginning to halt due to conflict, including a chartered Cargill cargo ship that was hit by a projectile and airstrikes near port cities. Long term shut downs would strain the food industry, which is already struggling from Covid shutdowns and the resulting inflation.

Buy Now Pay (Attention) Later. BNPL services have already been under some scrutiny for the lack of regulation in debt amounts users can accrue. One woman says buy now pay later platforms are “exploitative” and have compounded her ADHD struggles, renewing criticisms around the persuasive nature of eCommerce and marketplace platforms which target users with algorithmically-tuned offers.

Subscribe to The Senses.

Commerce futurism.
Straight to your inbox.

Thank you for being a risk-taker.
Oops! Something went wrong while submitting the form.
Share This Post

Commerce futurism for the risk-takers.
Straight to your inbox.

By clicking Subscribe you're confirming that you agree with having The Senses delivered to your email address.
Thank you for subscribing.
Oops! Something went wrong while submitting the form.
By clicking “Accept All Cookies”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts. View our Privacy Policy for more information.