Yandex, Russia’s biggest tech giant, wants to cut ties with the country, according to the NYT.
Yandex’s parent company has concerns about the impact of the Ukrainian war on its businesses.
The exit could deliver a blow to President Putin as he focuses efforts on homegrown tech and goods.
Russia stands to lose its biggest tech company, which would throw a wrench in President Putin’s plans to foster Russian-grown alternatives for Western technology.
Yandex, often referred to as Russia’s Google, is the country’s largest internet business best known for its search browser and ride-hailing apps. But its Dutch-based parent company wants out of Russia because of the potential negative impact the Ukrainian invasion could have on its business, according to a New York Times report. The exit of Russia’s biggest tech giant would deliver a blow to President Vladimir Putin, who has made a concerted effort to produce Russian technology and goods as sanctions cut access to Western suppliers.
As part of a larger restructuring plan first reported by Russian media outlet The Bell, Yandex’s parent company (called Yandex NV) would move its new businesses and most promising technologies — including self-driving cars, machine learning, and cloud-computing services — outside of Russia, the Times reported, citing two anonymous sources familiar with the matter. Those businesses would need access to Western markets, experts, and technology, all of which is unviable while the Russian invasion of Ukraine rages on and Western sanctions remain in place.
However, the decision to move Yandex’s fledgling technology businesses may not be up to its parent company. The firm will have to get the Kremlin’s approval to transfer Russian-registered tech licenses outside the country, The Times reported. Plus, Yandex’s shareholders would have to approve the broader restructuring plan.
Russia’s tech sector takes a beating amid Ukrainian war
Yandex’s business, once hailed as a rare Russian business success story, has struggled since the invasion of Ukraine. The tech giant’s story is not unlike those found in the Silicon Valley. Yandex employed more than 18,000 people, it was worth more than $31 billion, and is often referred to as the “Google of Russia.” It even had offices in downtown Palo Alto, California, at one point.
But since Russia’s invasion of Ukraine, thousands of Yandex employees have left Russia, and the price of the company’s New York-listed shares lost more than $20 billion in value almost immediately after the war, before Nasdaq suspended trading in its shares. Meanwhile, Yandex’s Moscow-listed shares dropped 62% in the past year.
Yandex’s misfortune mirrors other Russian tech companies, which have struggled in the face of Western sanctions and the exodus of tens of thousands of Russian IT workers, according to an Al Jazeera report. It’s something even Putin can’t deny, admitting that the Russian IT sector will experience “colossal” difficulties as the US and 37 other countries restrict Russia’s access to technologies, like semiconductors and telecommunications equipment, via export controls.
Untangling Russia’s reliance on the global economy has been an uphill battle for the country, even before the Ukrainian invasion and its sanctions.
In 2015, the Kremlin tried to stop all government bodies from using foreign software, but by 2019 only 10% of state-used software was Russian made. Russia’s not just dependent on foreign tech, either. More than half, or 65% of Russian businesses rely on imports for their manufacturing, according to a 2021 note from Russia’s central bank. From cars to office papermost companies involve foreign providers somewhere in the supply chain.
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