We saw this happen with Google/Baidu. Before Google pulled out of China, Baidu didn't stand a chance. Now, it's a global competitor. I wrote a final paper for my "next china" class in college, where my thesis was that the Great Firewall is economically beneficial for China. By inconveniencing Chinese users of foreign (read: American) services, it gives domestic competitors an inherent advantage. I argued that China doesn't actually care so much for the political reasoning behind the GFW, as everyone knows it can be trivially circumvented, but rather continues utilizing it because of the economic advantages it bestows on domestic corporations.

Baidu, Tencent, Alibaba, and other massive Chinese corporations built their businesses by copying the models of their American counterparts. The Chinese government gave them a huge advantage by subsidizing their development and crippling their US competitors. Now, these companies are on their way to controlling markets of the same size as their American competitors. It won't be long before Chinese companies are actually competing with American companies for American customers.

I suspect Russia, which is a country full of engineering talent (see: malware), will follow the same roadmap as China. That is: 1) cripple US internet businesses in Russia, 2) subsidize domestic competitors, 3) watch its own Internet companies take over the domestic market.

This move by the US government will have short term effects detrimental to Russian efficiency, but in the long term, Russia comes out on top in this scenario.

As to who these sanctions are biting. Sanctions always bite someone, but rarely do they hurt leaders. I think often they can help extend a regime's grip because it plays into propaganda.

Also, if sanctions were imposed generally for dicking about in other countries on dubious pretexts, then nobody would be trading with the UK or US right now. Glass houses and all that.

edit - if you want to influence Russia at the moment, either you please Putin, or work out how to get rid of him. Pissing him off won't help. He is a very experienced KGB guy who has oversaw the period of Russia returning from a brink of near dissolution to a state that is at least functioning, and people put up with a lot of crap to have something that functions.

There are parallels with China here in that the insanity of the Mao years can be used to justify putting up with a lack of political freedom today, on the basis that at least the current leaders aren't completely crazy. In Russia, people compare Putin with Yeltsin and think that things could be a lot worse as at least Putin can find his arse with both hands and isn't pissed all the time. Is the political version of New Coke.

To that end, any sanctions that do not actually destabilise Russia are probably counter productive and any that do destabilise Russia are just plain dangerous.

The question we really need to answer quickly is what does Putin actually want. If he is a Napoleon in waiting, we should try and depose him rather than pussyfooting around, whereas if he is merely a bit of a despot but not intent on conquest then it would be better to keep him happy and wait.

The Crimea doesn't really tell us much on that as it is where the Black Sea fleet has been kept since Potemkin's time, and so can be argued as a defensive as much as an offensive move. I am somewhat cheered by Putin's apparent lukewarm views towards the separatist movements in eastern Ukraine, though this could be a complete front.

I was convinced that he was going to try and force and hold a land corridor to the Crimea and the fact that this has not been done (yet) might indicate that Putin is not so much intent on expansion but is just keeping the whole thing warm to keep folk busy, much like China does with North Korea. If that is true, then hopefully he has had a bit of an 'Oh Fuck' moment with the airliner going down.

What I said has literally nothing to do with Russia or Ukraine. I'm talking about things the U.S. Government does, even domestically.

Edit: Which is why investors often choose not to invest in companies based in countries that have a history of economic or political instability. It can be difficult to hold someone to their obligations after investing if the state itself isn't going to consistently side with the rule of law. Russian and Chinese investors, for example, were they not already dealing with an even more unpredictable state, would possibly choose not to invest in the US because of unpredictable relations. But, most international investors consider US law to be predictable and stable and safe for investors.