- 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 Ukrainian war on its businesses.
- The exit could deal a blow to President Putin as he focuses efforts on homegrown technology and goods.
Russia stands to lose its largest technology company, which would throw a wrench into President Putin’s plans to promote Russian-grown alternatives to Western technology.
Yandex, often referred to as Russia’s Google, is the country’s largest Internet company 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 technology giant would deal 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. These companies would need access to Western markets, experts and technology, all of which is unsustainable while the Russian invasion of Ukraine continues and Western sanctions remain in place.
However, the decision to move Yandex’s new technology businesses may not be up to its parent company. The firm will need to get Kremlin approval to transfer Russian-registered technology licenses outside the country, The Times reported. Yandex’s shareholders would also 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 success story, has struggled since the invasion of Ukraine. The tech giant’s story is not unlike those found in 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.” 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 company’s New York-listed stock price lost more than $20 billion in value almost immediately after the war, before Nasdaq suspended trading of its shares. Meanwhile, Yandex’s Moscow-listed shares have fallen 62% in the past year.
Yandex’s misfortune mirrors that of other Russian technology 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 is something even Putin cannot deny, admitting that Russia’s IT sector will experience “colossal” difficulties as the US and 37 other countries restrict Russia’s access to technologies such as semiconductors and telecommunications equipment through export controls.
Untangling Russia’s dependence 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 agencies from using foreign software, but in 2019, only 10% of government-used software was Russian-made. Russia is not only dependent on foreign technology either. More than half, or 65%, of Russian companies depended on imports for their manufacturing, according to a 2021 note from the Central Bank of Russia. From cars to office paper, most companies involve foreign suppliers somewhere in the supply chain.