- Yandex, Russia’s biggest tech 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 business.
- The exit could deal a major blow to President Putin as he focuses efforts on local technology and goods.
Russia is about to lose its biggest tech company, which would throw a wrench in President Putin’s plans to promote Russian-made 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 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 exit of Russia’s biggest tech giant would deal a major 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 broader restructuring plan first reported by Russian media The Bell, Yandex’s parent company (called Yandex NV) would shift its most promising new businesses and technologies, including self-driving cars, machine learning and cloud computing services outside Russia, the Times reported, citing two unnamed sources familiar with the matter. Those firms would need access to Western markets, experts and technology, all of which is impractical as the Russian invasion of Ukraine rages on and Western sanctions remain in place.
However, the decision to move Yandex’s fledgling tech assets may not rest with the parent company. The company will need to get Kremlin approval to transfer Russian-registered technology licenses outside the country, the Times reported. Also, Yandex shareholders are expected to approve the broader restructuring plan.
Russia’s tech sector takes a hit during the Ukrainian war
Yandex’s business, once hailed as a rare Russian corporate success story, has struggled since the invasion of Ukraine. The story of the tech giant 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 “Russia’s Google.” 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 New York-listed company’s stock price has lost more than $20 billion in value almost immediately after the war, before the Nasdaq suspended the negotiation of its shares. Meanwhile, Yandex’s Moscow-listed shares are down 62% over the past year.
Yandex’s misfortune mirrors other Russian tech companies, which have struggled against Western sanctions and the exodus of tens of thousands of Russian IT workers, according to an Al Jazeera report. It’s something not even Putin can deny, admitting that Russia’s IT sector will face “colossal” difficulties as the United States and 37 other countries restrict Russia’s access to technologies, such as semiconductors and telecommunications equipment, through security controls. exports.
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 block all government entities from using foreign software, but in 2019, only 10% of the software used by the state was Russian-made. Russia doesn’t just depend on foreign technology. More than half, or 65%, of Russian firms relied on imports for their production, according to a 2021 note from Russia’s central bank. From cars to office paper, most companies involve foreign suppliers at some point in the supply chain.