- Yandex, Russia’s largest technology company, 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 be a blow to President Putin as he focuses on domestic and infrastructure spending.
Russia stands to lose its largest technology company, which will affect President Putin’s plans to promote Russian-style replacement for Western technology.
Yandex, often referred to as Russia’s Google, is the country’s largest internet company best known for its browser search and ride-hailing apps. But its Dutch parent company wants out of Russia because of the potential negative impact the Ukrainian invasion could have on its business, according to the New York Times. The exit of Russia’s largest technology company will be a blow to President Vladimir Putin, who has been working together to build a Russian heritage and industrial base. sanctions cut access to western suppliers.
As part of a larger reorganization first reported by Russian news outlet The Bell, Yandex’s parent company (known as Yandex NV) will move its new business and technology best output — including self-driving cars, machine learning, and cloud services — outside of Russia, the Times reported, citing two anonymous sources familiar with the matter. These businesses will need access to Western markets, expertise, and technology, all of which cannot be used while Russian interference in Ukraine rages on and Western sanctions still in place.
However, the decision to move to Yandex’s technology business will not hurt its parent company. The company needs to get approval from the Kremlin to transfer the license to use Russian technology outside of Russia, The Times reported. In addition, Yandex shareholders must agree to the restructuring plan.
Russia’s tech sector will take a hit in the Ukrainian war
Yandex’s business, once hailed as a rare Russian business success, has struggled since the invasion of Ukraine. The tech giant’s story is not like those found in Silicon Valley. Yandex employs more than 18,000 people, it is worth more than $31 billion, and is often called the “Google of Russia.” He even had an office in downtown Palo Alto, California, at one point.
But since Russia’s invasion of Ukraine, thousands of Yandex employees have left Russia, and the value of the company’s New York stock has fallen by more than $20 billion in value almost immediately. after the war, before Nasdaq suspended trading in its shares. Meanwhile, Yandex’s Moscow share price has fallen 62% over 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 Al Jazeera. report. It is something even Putin cannot deny, admitting that the Russian IT sector will face “colossal” difficulties as the US and 37 other countries block Russia’s access to technology, such as electronic equipment and telecommunication equipment, through export control.
Untangling Russia’s hopes for international trade has led to a battle for the country, even before the Ukranian invasion and its sanctions.
In 2015, the Kremlin tried to ban all government agencies from using foreign software, but by 2019 only 10% of state-use software was Russian-made. Russia is not dependent on foreign tech, either. More than half, or 65% of Russian businesses rely on imports for their production, according to a 2021 report from Russia’s central bank. From cars to stationery, most companies involve foreign service providers somewhere in the supply chain.