According to NYT, Russia’s biggest tech giant Yandex wants to cut ties with the country.
Yandex’s parent company has concerns about the impact of the Ukrainian war on its businesses.
The exit may come as a blow to President Putin as he focuses on indigenous technology and goods.
Russia stands to lose its biggest tech company, which would throw a wrench in President Putin’s plans to promote Russian-developed alternatives to Western technology.
Yandex, often called the Google of Russia, is the country’s largest Internet business best known for its search browser and ride-hailing apps. But its Dutch-based parent company is looking to move out of 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 come as a blow to President Vladimir Putin, who has made a concerted effort to produce Russian technology and goods as sanctions curtail access to Western suppliers.
As part of a larger restructuring plan reported by Russian media outlet The Bell, Yandex’s parent company (called Yandex NV) will transfer its new businesses and most promising 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 businesses will need access to Western markets, experts and technology, all of which are impractical while the Russian invasion of Ukraine continues and Western sanctions remain in place.
However, the decision to move Yandex’s budding technology businesses may not be up to its parent company. The Times reported that the firm would have to seek Kremlin approval to transfer Russian-registered technology licenses outside the country. Also, the shareholders of Yandex must approve a comprehensive restructuring plan.
Russia’s tech sector hit hard amid Ukrainian war
Yandex’s business, once touted as a rare Russian business success story, has struggled since the invasion of Ukraine. The tech giant’s story is not unlike the one found in Silicon Valley. Yandex employed over 18,000 people, was worth over $31 billion, and is often referred to as the “Google of Russia”. It even had an office in the city of Palo Alto, California at one point.
But since Russia’s invasion of Ukraine, thousands of Yandex employees have left Russia, and the company’s New York-listed shares 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% in the past year.
According to a report by Al Jazeera, Yandex’s misfortune mirrors that of other Russian tech companies, which have struggled in the face of Western sanctions and an exodus of thousands of Russian IT workers. It’s something even Putin can’t deny, acknowledging that the Russian IT sector will experience “immense” difficulties as 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 global 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 bodies 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 Russia’s central bank, more than half or 65% of Russian businesses depend on imports for their manufacturing. From cars to office paper, most companies involve foreign providers in the supply chain.
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