Why companies can’t afford to keep dealing with dictators

The exodus throws a spotlight on what some of those companies were doing in Russia in the first place — and why it took an act of war to change them. One company in particular that is in that spotlight is Nokia.

On Monday, the New York Times revealed how Nokia has provided years of equipment and services to support the massive Russian surveillance system used to spy on dissidents. Although Nokia denounced the invasion of Ukraine and said it would halt sales in the country, the company told the Times it must make products that comply with the surveillance system.

In other words, this was just the cost of doing business in Russia.

In a statement, Nokia said the Times article is misleading, stressing that the company “does not manufacture, install or maintain” its monitoring tools. “We condemn any abuse of lawful interception to violate human rights,” it said. “To prevent this, there is a strong need for multilateral action to ensure adequate frameworks.”

Laws vs Ethics

There is no evidence that Nokia has done anything illegal, but ethics and laws are not the same.

It’s hard to imagine Nokia not knowing what was going on in Russia. A Russian intelligence expert who spoke to the Times said Nokia “must have known how their devices would be used”.

Experts say no company (or consumer) can keep their hands perfectly clean. The vast and interconnected nature of global supply chains makes it virtually impossible to avoid any interaction – directly or indirectly – with corruption, labor exploitation or other unsavory elements of global trade.

The question then is how close you are to the bad behavior, says Jason Brennan, a professor of business ethics at Georgetown University.

“Nobody’s willing to swim in a pool if there’s a corpse in the pool, but you’re willing to swim in the ocean… It’s kind of about the concentration of death around you,” he says. “Markets are a bit like that too.”

That is, Nokia may not have created the technology that spied on Russians, but it did show Russian authorities how to hook it up, and that should have been a big red flag for the top of the company.

The documents reviewed by the Times show that the company knew it was engaging the Russian surveillance device. According to the Times, it was an essential and lucrative business for Nokia, generating hundreds of millions of dollars in annual revenue.

Nokia called on governments to set clearer rules about where technology can and cannot be sold. “Nokia does not have the ability to monitor, access or interfere with any lawful interception capability in the networks our customers own and operate,” it told the newspaper.

This is a common refrain of large corporations struggling to control themselves: they ask governments to step in to protect them from our lowest impulses. (See: Zuckerberg, Mark.)

Achieving a balance

This is hardly a new dilemma for multinational companies. Big Tech, in particular, struggles to balance democratic ideals of free speech and privacy and the realities of doing business in authoritarian markets like China and Russia, where those rights are lacking.

For example, Apple has long prided itself on protecting customer privacy. But in China, Apple had to bend those values ​​to comply with regulators.

A Times investigation last summer found that Apple helped government censor the Chinese version of the App Store and compromised Chinese customers’ data. Apple denied some of the report’s findings, saying it was only removing apps to comply with Chinese law.
Likewise, chips from Intel and Nvidia would help power the computers China uses in its massive surveillance of Muslim minorities.
And last year, Microsoft said it accidentally deleted photos of the 1989 Tiananmen Square crackdown around the world on its Bing search engine — a rare example of China’s strict internal censorship spreading beyond its borders.

Tech leaders, including Apple CEO Tim Cook, have argued that it is better to participate in authoritarian markets than to sit on the sidelines. But that often means sticking to regimes that are responsible for human rights violations — and sometimes assisting them in those activities.

Brennan, a professor of business ethics, argued that companies should not directly aid a totalitarian government, even if local laws force them to do so. “You can’t do it because you’re instructed to, and you can’t do it for money,” he said.

And if that means losing a lot of money, then that’s a shame. “You can’t do it for $200 billion. You can’t do it for a million. That’s just a basic ethic,” Brennan added.

That said, there’s good news for companies like Nokia seeking help to rein in themselves: doing the right thing is a good thing. It’s not only good for PR – it’s also good for profit.

Consumers and investors are increasingly aware of the behavior of their companies, and companies have taken notice. Watch how quickly Disney reversed its response and actions after initially refusing to oppose Florida’s so-called Don’t Say Gay law. And the speed of the Russian exodus among Western brands underscores a relatively new era in which investors and customers are demanding that brands do more than maximize profits at all costs.

So companies must do the right thing and often pass up lucrative opportunities to aid the bad intentions of hostile governments. If they give in to their impulses, there will be consequences for their actions – for the companies and for the world.

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