- According to NYT, Russia’s largest tech giant Yandex wants to cut ties with the country.
- Yandex’s parent company is concerned about the impact of the war in Ukraine on its businesses.
- The exit could be a blow to President Putin as he focuses on indigenous technology and goods.
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Russia is about to lose its largest technology company, which would upset President Putin’s plans to promote Russian-developed alternatives to Western technology.
Yandex, sometimes referred to as Russia’s Google, is the country’s largest internet company, best known for its search browser and ride-hailing apps. But the 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 departure of Russia’s largest tech giant would be a blow to President Vladimir Putin, who has made a concerted effort to produce Russian technology and goods as sanctions limit access to Western suppliers.
As part of a larger restructuring plan reported by Russian media outlet The Bell, Yandex’s parent company (named Yandex NV) will move its new business and 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. Those companies will need access to Western markets, experts and technology, all of which are impractical as long as the Russian invasion of Ukraine continues and Western sanctions remain in place.
However, the decision to move Yandex’s burgeoning technology companies may not rest with the parent company. The Times reported that the company would have to seek approval from the Kremlin to transfer technology licenses registered in Russia outside the country. Also, Yandex shareholders must approve a comprehensive restructuring plan.
The Russian technology sector has been hit hard during the war in Ukraine
Yandex’s company, once touted as a rare Russian business success story, has struggled since the invasion of Ukraine. The story of the tech giant is no different than that 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”. At one point, it even had an office in the city of Palo Alto, California.
But since the Russian invasion of Ukraine, thousands of Yandex employees have left Russia, and the company’s New York-listed stock lost more than $20 billion in value almost immediately after the war, before the Nasdaq listed its shares. Business was suspended. Meanwhile, Moscow-listed shares of Yandex fell 62% over the past year.
According to an Al Jazeera report, Yandex’s misfortune mirrors that of other Russian tech companies, which have struggled with Western sanctions and an exodus of thousands of Russian IT workers. It’s something even Putin can’t deny, acknowledging that Russia’s IT sector will face “immense” difficulties when the US and 37 other countries block Russia’s access to technologies such as semiconductors and telecommunications equipment through export controls. Let’s ban.
Reconciling Russia’s dependence on the world economy has been an uphill battle for the country, even before the invasion of Ukraine and its sanctions.
In 2015, the Kremlin tried to prevent all government agencies from using foreign software, but as of 2019 only 10% of the software used by the state was Russian-made. Russia is not only dependent on foreign technology. According to a 2021 note from the Russian central bank, more than half or 65% of Russian companies depend on imports for their production. From cars to office paper, most companies involve foreign suppliers in their supply chain.