- Yandex, Russia’s biggest tech giant, wants to sever 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 blow to President Putin as he focuses his efforts on technology and local products.
Russia risks losing its biggest tech company, which would put a damper on President Putin’s plans to promote Russian alternatives to Western technology.
Yandex, often referred to as Google in Russia, is the country’s largest internet company, known for its search browser and ride-sharing apps. But its 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 exit of Russia’s biggest tech giant would be a blow to President Vladimir Putin, who has made a concerted effort to produce Russian technology and goods as sanctions restrict access to Western suppliers.
As part of a larger restructuring plan first announced by Russian news outlet The Bell, Yandex’s parent company (called Yandex NV) would shift its new businesses and the most promising technologies – including self-driving cars, machine learning and cloud computing services – outside of Russia, The Times reported, citing two unnamed sources familiar with the matter. These companies would need access to Western markets, experts and technology, which is not viable as long as the Russian invasion of Ukraine rages on and Western sanctions remain in place.
However, the decision to move Yandex’s fledgling tech business might not lie with its parent company. The company will need to get Kremlin approval to transfer technology licenses registered in Russia outside the country, The Times reported. Additionally, Yandex shareholders are expected to approve the broader restructuring plan.
The Russian tech sector is battered by the war in Ukraine
Yandex’s business, once hailed as one of the few Russian business success stories, has struggled since the invasion of Ukraine. The history of the technology giant is not unlike that of Silicon Valley. Yandex employed over 18,000 people, was worth over $31 billion and is often called the “Google of Russia”. He even had offices in downtown Palo Alto, California at one time.
But since Russia invaded Ukraine, thousands of Yandex employees left Russia, and the New York-listed company’s stock price lost more than $20 billion almost immediately after the war. before the Nasdaq suspended trading in its shares. Meanwhile, shares of Moscow-listed Yandex have fallen 62% over 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 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 export controls.
Unraveling 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 agencies from using foreign software, but in 2019 only 10% of software used by the state was made in Russia. Russia is not just dependent on foreign technology either. More than half, or 65% of Russian businesses depended on imports for their manufacturing, according to a 2021 note from the Russian central bank. From cars to office paper, most companies use foreign suppliers somewhere in the supply chain.