Russia poured state support behind MyOffice. It banned Western office software for government and critical sectors. Microsoft pulled out amid sanctions and lawsuits. The conditions looked perfect for a homegrown challenger. Yet the project now shrinks offices, fires staff and bleeds cash at an accelerating rate.
New Cloud Technologies, the company behind MyOffice, restated its 2025 financials in June 2026. The net loss jumped from 4.02 billion rubles to 8.82 billion rubles. That’s roughly $107 million. Revenue fell by half to around 1 billion rubles. Debt owed to its main shareholder rose 33 percent to 24.96 billion rubles. TechRadar first highlighted the scale of the reversal.
Shortfalls like these don’t happen by accident. They reflect deeper problems. Users resisted the software. Developers struggled to match Microsoft features. Even a captive market couldn’t deliver profits.
The latest blow came this month. MyOffice shut its development centers in St. Petersburg and Innopolis. The St. Petersburg site handled core office applications and mobile versions. It employed 200 to 300 people. Innopolis had about 20. Remaining staff now work from Kaspersky Lab’s Moscow office in the Olympia Park business center. CEO Vyacheslav Zakorzhevsky confirmed several sites closed but offered few details.
The Human and Operational Toll
Layoffs hit hard. Employees received warnings months earlier. Entire departments faced elimination. Technical support survived in some cases. But the mood turned grim. Sources told UNITED24 Media that the closures followed internal notices about large-scale cuts. The pattern repeated from May reports of impending reductions at New Cloud Technologies.
And the owner? Kaspersky Lab holds 68.8 percent through Smarty Lab. Eugene Kaspersky, the cybersecurity firm’s chief, spoke bluntly at the St. Petersburg International Economic Forum. He called MyOffice a loss-making asset moved into “slow-burn mode.” Development investment dropped. Product work and support continue but at lower intensity. Then he delivered the verdict: import substitution does not work in the office segment. The statement carried extra sting because Kaspersky had backed the project heavily.
Four products saw development suspended: Mailion, MyOffice Mail, Squadus and Documents Online. Existing deployments keep running. The company wrote down intangible assets, mainly software, which drove much of the restated loss. Payments from software sales often arrive late, the firm said in its accounts. That excuse explains little when market share slips despite every advantage.
Market data tells a brutal story. MyOffice held 5 percent of the domestic market before the full Western exit. By the end of 2025 that share fell to 3 percent. Two points lost under ideal conditions. No Microsoft competition. State orders pushing local software. Yet adoption stalled. Training costs rose. Compatibility issues persisted. Workers preferred familiar tools even when alternatives were mandated.
But the failure runs deeper than one company. Russia’s push for technological sovereignty in software dates back years. Sanctions after 2022 intensified the drive. Officials hailed domestic alternatives as proof of resilience. MyOffice received contracts, subsidies and mandates. Similar stories played out in other sectors. Some succeeded. Many quietly underperformed.
Recent coverage shows the pressure building across Russian business. Up to 15,000 companies close each month for economic reasons. High interest rates at 21 percent squeeze borrowers. Firms cut projects that fail to deliver quick returns. White-collar layoffs spread even as labor shortages persist in some areas. NV.ua reported the monthly closures tripled from prior levels. MyOffice fits this pattern. Its losses mounted while the broader economy cooled.
Earlier signs appeared in May. UNITED24 Media detailed warnings of multibillion-ruble losses and staff reductions. The firm had already lost about 6.2 billion rubles in 2023-2024 according to other reports. The 2025 figure marked a sharp acceleration. Restatement in June made the numbers official and worse.
Discussions on X reflected skepticism. One post noted the St. Petersburg office’s role in desktop and mobile development. Another called it the “Microsoft Office killer” that killed itself. Posts from August 7 and 9 cited the sevenfold loss increase and Kaspersky’s funding cut. The tone mixed dark humor with recognition that import substitution hit limits here.
Why did it go wrong? Product quality played a part. Microsoft Office set a high bar for integration, cloud features and user experience. MyOffice offered basic compatibility but lagged in polish. Enterprise buyers noticed. Government users complied on paper yet grumbled in practice. Training programs consumed budgets without clear productivity gains.
Business model flaws compounded the issue. Revenue halved while losses grew. Delayed payments strained cash flow. Heavy debt to the parent company limited options. When Kaspersky shifted the unit to slow-burn status, the message was clear. Further big investments carried too much risk. The asset would run at minimal cost while managers sought a path forward or an exit.
Zakorzhevsky’s return to Kaspersky compliance duties after leading MyOffice drew quiet commentary on X. His tenure ended with restructuring. The cycle of ambitious projects followed by contraction repeats often in Russia’s tech sector under sanctions.
Broader implications stretch beyond one software firm. Russia’s attempt to build parallel digital infrastructure faces repeated tests. Hardware proves even harder than software. Talent drains overseas when opportunities shrink. High interest rates and economic isolation raise the cost of every experiment.
Still, some domestic tools gain traction in narrow areas. Certain cybersecurity products show strength. But office productivity software demands broad adoption and constant updates. MyOffice never achieved the network effect that makes such platforms sticky. Users switched back when possible or used workarounds.
The restated accounts revealed impairment charges on intangible assets. That accounting move writes down the value of years of development. It signals management no longer expects the same returns. Combined with product suspensions, the restructuring looks like managed decline rather than temporary setback.
Analysts watching Russian tech note the contrast with early promises. MyOffice once courted African markets as part of broader diplomatic efforts. Deals in Burundi, Cameroon and Congo surfaced years ago. Those initiatives now seem distant. Domestic troubles consume attention.
So what happens next? Slow-burn mode buys time. Kaspersky may seek a buyer or further slim the operation. Government mandates could still prop up usage in state bodies. But without genuine user preference, market share may erode more. The 3 percent figure already shows limits of compulsion.
Western observers see validation of sanctions pressure. Russian developers lose access to global tools, components and talent pools. The result appears in red ink and empty office floors. Yet Moscow will likely continue funding select projects. National pride and security concerns demand it.
The MyOffice story carries lessons for any nation pursuing rapid digital independence. Mandates alone don’t create demand. Products must compete on merit even in protected markets. Features, reliability and support determine success more than policy. MyOffice had policy on its side. The market rendered a different judgment.
Recent X chatter and August reports suggest the closures caught few insiders by surprise. Warnings circulated internally for months. The restated loss simply confirmed what balance sheets hinted. For an industry built on code and user trust, these numbers represent more than financial failure. They mark a strategic retreat in a flagship effort to replace Microsoft.
Russia’s tech ambitions continue in other forms. But the office software battle exposes cracks. When even a near-monopoly position yields rising losses and shrinking presence, questions multiply. Can import substitution scale beyond niche areas? Will users embrace local tools when given real choice? MyOffice provides one data point. And the data looks discouraging.