Sale of Kaspersky cybersecurity software banned in US

The Joe Biden administration today announced a ban on the sale of Kaspersky Lab’s cybersecurity software in the United States, citing concerns over the company’s close ties to the Russian government, according to a Reuters news report.

Kaspersky Lab event

The administration’s decision is driven by fears that the software’s access to computer systems could enable it to steal sensitive information, install malware, or withhold critical updates from American computers.

Interestingly, the United States government has never produced any proof to support the connection between Kaspersky Lab and the Russian Government. United States has also not yet produced any proof on the ability of Kaspersky Lab to steal sensitive data from Americans, analysts told InfotechLead.com.

Kaspersky never disclosed the size of its business revenue in the United States. Kaspersky’s customers include critical infrastructure providers and state and local governments.

The U.S. cyber security market size was valued at $53.45 billion in 2022. The cyber security market in the US is projected to grow from $59.06 billion in 2023 to $128.99 billion by 2030, exhibiting a CAGR of 11.8 percent during the forecast period, according to market reports.

Commerce Secretary Gina Raimondo said that Russia’s influence over the company poses a significant security risk.

“Russia has shown it has the capacity and … the intent to exploit Russian companies like Kaspersky to collect and weaponize the personal information of Americans and that is why we are compelled to take the action that we are taking today,” Gina Raimondo said on a briefing call with reporters.

Kaspersky said it believed the U.S. decision was based on “the present geopolitical climate and theoretical concerns, rather than on a comprehensive evaluation of the integrity of Kaspersky’s products and services.”

In an emailed statement, Kaspersky added that its activities did not threaten U.S. national security and that it will pursue legal options to preserve its operations.

The Commerce Department will entity list two Russian and one UK-based unit of Kaspersky for allegedly cooperating with Russian military intelligence to support Moscow’s cyber intelligence goals.

Kaspersky’s Russian business is already subject to sweeping U.S. export restrictions over Moscow’s invasion of Ukraine. But its UK-based unit will now be effectively barred from receiving goods from American suppliers.

Kaspersky Lab has denied any ties to the Russian government, maintaining that it is a privately managed entity.

These actions highlight the U.S. government’s efforts to mitigate risks of Russian cyberattacks through Kaspersky software, amidst ongoing tensions and Russia’s intensified military actions in Ukraine. With limited new sanctions available, the Biden administration aims to exert additional pressure on Moscow, the report said.

The new restrictions, which will also prohibit software updates, resales, and licensing of Kaspersky products, will take effect on September 29. This 100-day lead time is intended to allow businesses to transition to alternative cybersecurity solutions.

Any new business dealings with Kaspersky in the U.S. will be blocked 30 days after the restrictions are officially announced. Additionally, the sale of white-labeled products that incorporate Kaspersky software will also be prohibited.

If the Commerce Department includes Kaspersky’s foreign subsidiaries on the entity list, it could disrupt the company’s supply chain by restricting access to significant U.S. inputs. However, if only the Russian entity is listed, the impact would primarily be reputational.

This development follows the Department of Homeland Security’s 2017 ban on Kaspersky antivirus products from federal networks due to alleged ties to Russian intelligence and concerns over Russian laws that could compel Kaspersky to assist intelligence agencies.

Kaspersky Lab, which operates under a U.K. holding company and has a presence in Massachusetts, reported revenues of $752 million in 2022, serving over 220,000 corporate clients across approximately 200 countries. The company’s clientele includes notable organizations such as Italian vehicle maker Piaggio, Volkswagen’s retail division in Spain, and the Qatar Olympic Committee.

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