- Yandex, Russia’s largest technology giant, wants to cut ties with the country, according to the NYT.
- Yandex’s parent company is concerned about the impact of the war in Ukraine on its businesses.
- The exit could be a blow to President Putin as he focuses his efforts on homegrown technology and goods.
Russia is about to lose its largest tech company, which would upset President Putin’s plans to promote Russian-grown alternatives to Western technology.
Yandex, also known as Russia’s Google, is the country’s largest internet company best known for its search browser and ride-hailing apps. But the Netherlands-based parent company wants to leave Russia because of the potential negative impact the Ukrainian invasion could have on its business, according to a New York Times report. The departure of Russia’s largest tech giant would be a blow to President Vladimir Putin, who has made a concerted effort to produce Russian technology and goods while sanctions cut off access to Western suppliers.
As part of a larger restructuring plan first reported by Russian media outlet The Bell, Yandex’s parent company (named Yandex NV) is said to be moving its new business and most promising technologies – including self-driving cars, machine learning and cloud computing services – out of Russia, the Times reported, citing two anonymous sources familiar with the matter. Those companies would need access to Western markets, experts and technology, none of which is viable as long as the Russian invasion of Ukraine continues and Western sanctions remain in place.
The decision to move the young technology companies from Yandex may not rest with the parent company. The company will need to get approval from the Kremlin to transfer technical licenses registered in Russia outside the country, The Times reported. In addition, Yandex shareholders should approve the broader restructuring plan.
Russia’s tech sector is taking a beating amid the war in Ukraine
Yandex’s company, once hailed as a rare Russian business success story, has struggled since the invasion of Ukraine. The tech giant’s story is similar to that of Silicon Valley. Yandex employed more than 18,000 people, was worth more than $31 billion and is often referred to as the “Google of Russia.” At one point, it even had offices in downtown Palo Alto, California.
But since the Russian invasion of Ukraine, thousands of Yandex employees have left Russia, and the price of the company’s New York-listed stock lost more than $20 billion in value almost immediately after the war, before Nasdaq suspended trading of its stock. . Meanwhile, Moscow-listed shares of Yandex fell 62% over the past year.
Yandex’s misfortune echoes the fate of other Russian tech companies, which have struggled with 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 Russia’s IT sector will face “colossal” difficulties as the US and 37 other countries restrict Russia’s access to technologies, such as semiconductors and telecommunications equipment, through export controls.
Unraveling Russia’s dependence on the world economy has been an uphill battle for the country, even before the Ukrainian invasion and associated sanctions.
In 2015, the Kremlin tried to stop all government agencies from using foreign software, but in 2019 only 10% of the software used by the state was Russian-made. Russia is also not only dependent on foreign technology. According to a 2021 note from the Russian central bank, more than half or 65% of Russian companies depended on imports for their production. From cars to office paper, most companies source foreign suppliers somewhere in the supply chain.