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Russia stands to lose its biggest tech company, which would throw a wrench in President Putin's plans to foster Russian-grown alternatives for Western technology.
Yandex, often referred to as Russia's Google, is the country's largest internet business best known for its search browser and ride-hailing apps. But its Dutch-based parent company, Yandex N.V., wants out of Russia because of the potential negative impact the Ukrainian invasion could have on its business, according to a report by The New York Times.
The exit of Russia's biggest tech company would deliver a blow to Putin, who has made a concerted effort to produce Russian technology and goods as sanctions cut access to Western suppliers.
Yandex N.V. said Friday that its board had "commenced a strategic process to review options to restructure the group's ownership and governance in light of the current geopolitical environment."
These options, Yandex said, included developing some of its international divisions "independently from Russia" and divesting "ownership and control of all other businesses in the Yandex Group." The company added: "This process is at a preliminary stage."
The Bell, a Russian media group, had earlier reported that Yandex N.V. 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. Those businesses would need access to Western markets, experts, and technology, all of which is unviable while the Russian invasion of Ukraine rages on and Western sanctions remain in place.
However, the decision to move Yandex's fledgling technology businesses might not be up to its parent company. The firm will have to get the Kremlin's approval to transfer Russian-registered tech licenses outside of the country, The Times reported. Plus, Yandex's shareholders would have to approve the broader restructuring plan.
Yandex's business, once hailed as a rare Russian business success story, has struggled since the invasion of Ukraine. The tech giant's story is not unlike those found in the Silicon Valley. Yandex employed more than 18,000 people, it 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 price of the company's New York-listed shares lost more than $20 billion in value almost immediately after the war, before Nasdaq suspended trading in its shares. Meanwhile, Yandex's Moscow-listed shares dropped 62% in 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 the Russian IT sector will experience "colossal" difficulties as the US and 37 other countries restrict Russia's access to technologies, like semiconductors and telecommunications equipment, via export controls.
Untangling Russia's reliance on the global economy has been an uphill battle for the country, even before the Ukranian invasion and its sanctions.
In 2015, the Kremlin tried to stop all government bodies from using foreign software, but by 2019 only 10% of state-used software was Russian made. Russia's not just dependent on foreign tech, either. More than half, or 65% of Russian businesses relied on imports for their manufacturing, according to a 2021 note from Russia's central bank. From cars to office paper, most companies involve foreign providers some place in the supply chain.
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Russian Tech Giant Wants Out of the Country As Ukraine War Rages on
