Russian tech giant wants out of the country as Ukraine war rages on

The parent firm of a Russian tech giant, Yandex, aims to cut ties with the country to shield its new businesses from the fallout of the Ukraine war. The move would be a setback to Vladimir Putin’s plan to create homegrown substitutes for Western.

Russian tech giant, the country, Ukraine

Russia stands to lose its biggest tech company, which would throw a wrench in President Putins plans to foster Russian-grown alternatives for Western technology. 

Yandex, often referred to as Russias Google, is the countrys largest internet business best known for its search browser and ride-hailing apps. But its Dutch-based parent company wants 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 Russias biggest tech giant would deliver a blow to President Vladimir Putin, who has made a concerted effort to produce Russian technology and goods as sanctions cut access to Western suppliers. 

As part of a larger restructuring plan first reported by Russian media outlet The Bell, Yandexs parent company (called 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 Yandexs fledgling technology businesses might not be up to its parent company. The firm will have to get the Kremlins approval to transfer Russian-registered tech licenses outside of the country, The Times reported. Plus, Yandexs shareholders would have to approve the broader restructuring plan. 

Yandexs business, once hailed as a rare Russian business success story, has struggled since the invasion of Ukraine. The tech giants 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 Russias invasion of Ukraine, thousands of Yandex employees have left Russia, and the price of the companys New York-listed shares lost more than $20 billion in value almost immediately after the war, before Nasdaq suspended trading in its shares. Meanwhile, Yandexs Moscow-listed shares dropped 62% in the past year.

Yandexs 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. Its something even Putin cant deny, admitting that the Russian IT sector will experience "colossal" difficulties as the US and 37 other countries restrict Russias access to technologies, like semiconductors and telecommunications equipment, via export controls.  

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. Russias 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 Russias central bank. From cars to office paper, most companies involve foreign providers some place in the supply chain. 

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