Nicknamed “Russia’s Google,” Yandex was the symbol of Russian entrepreneurship, the country’s largest technology multinational. But the dream of its founder, Arkady Volozh, turned into a nightmare after his country’s invasion of Ukraine.
A company that once competed with Silicon Valley giants, Yandex is about to be decommissioned. Volozh will be allowed to keep all unsold foreign assets, and a direct member of the Kremlin will join the company as a shareholder. The decision came not from his board of directors or an anti-monopoly body, but from Russian President Vladimir Putin, whose thoughts on any subject are law in 21st-century Russia.
On Nov. 24, Putin instructed his government to introduce artificial intelligence “into every national initiative” and called for cloud services to be promoted within its borders, one of the activities Yandex will see cut.
Volozh has seen his multinational cut off from the rest of the world due to EU sanctions. Although the company was not directly blacklisted, the businessman was fined in June and the company was significantly affected by sanctions on Russia’s financial sector and flight of investors. Its listing on the US stock exchange was suspended in March after its shares plunged to $18.9, down 77% from March 2021.
Up to this point, Yandex has been trying to survive the war, which its board has sharply criticized. “War is monstrous,” Volozh’s deputy chief executive, Tigran Khudaverdyan, said in March before resigning. However, the company decided to save itself trouble and deleted a number of borders from its map service after the Kremlin annexed several Ukrainian territories in September.
Facing the prospect of Russia’s worsening political or economic crisis, Yandex was one of several tech companies to relocate thousands of workers to other countries. In the summer, it announced the opening of offices in Belgrade, Serbia, and Yerevan, Armenia, relocating hundreds of employees. Meanwhile, the Israeli newspaper Haaretz it revealed in March that another 800 workers would be transferred to the Jewish state.
Faced with this situation, Volozh negotiated a restructuring plan with the Kremlin. According to the Russian media site The bell, negotiations were held with the head of the Chamber of National Accounts and former Minister of Economy, Alexei Kudrin. Volozh currently lives in Israel and delegated his voting rights in the company after being sanctioned by Brussels.
The parent company, Yandex NV, is registered in the Netherlands. The restructuring deal provides for the creation of another main company in Russia that will take over all domestic business while most of the foreign business will be sold, except for four strategic stakes that Volozh will retain. The current management of Yandex will move to the new Russian company, albeit with changes: former economy minister Kudrin will get a 5% stake in the new company, according to The bell And Forbes. And its founder will receive a minority stake.
The idea is to avoid the sanctions imposed on Russia affecting the four main foreign branches: drones, cloud services, autonomous cars and an educational initiative. However, it remains to be seen whether European authorities will approve. When Brussels sanctioned Volozh, it stressed in its statement that the multinational was not only owned by Russian state banks Sberbank and VTB, but was also “responsible for promoting the Russian government’s media narrative” while its business was a “source substantial amount of revenue” for the Kremlin.
Tech giants dominated by the Kremlin
Yandex isn’t the first tech giant the Russian government has wrested control from. Russia’s Facebook, VKontakte, was nationalized in December 2021 via Gazprom, while Meta’s Facebook was outlawed for fomenting opposition and distributing material critical of the war.
Putin himself has no social media and is unfamiliar with how platforms like YouTube work. “What should I sign? I don’t understand,” he said last year in response to a request from a child who encouraged him to join his YouTube channel. However, on Nov. 24, he gave a talk at the World Journey into Artificial Intelligence forum in which he issued numerous instructions, including that all initiatives by the authorities should include these technologies, from schools to healthcare, promising that the country’s life expectancy would therefore exceed the age of 80.
“From 2023, we will monitor the use of artificial intelligence in the economy and in the social sphere,” Putin said in his speech. “To do this, I propose to create a special tool – a maturity index for industries and regions.” However, he was also unable to hide his deep distrust of new technologies: “If you digitize chaos, you only get digital chaos […] first you have to put things in order,” he said.