Yandex to sell Russian businesses, flee country with its best tech

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After Moscow invaded Ukraine, the ‘Google of Russia’ has decided that it cannot stay in Russia.

Moscow-based Yandex, the country’s top search engine founded by two Russian entrepreneurs, hopes to transfer its most promising new technologies abroad and divest most of its Russian business to avoid the effects of Western sanctions imposed after that President Vladimir Putin ordered Russia to Ukraine.

Under the plan, that the financial times Yandex NV, the Dutch-registered Yandex holding company, reported Thursday that it would sell most of its Russian businesses, such as search, e-commerce and private transportation, to a local buyer. the New York Times later reported that Yandex NV would shift its most promising technologies to markets outside of Russia.

By cutting ties with Russia, Yandex hopes to protect its newer companies, such as self-driving cars, cloud computing and educational technology, from connecting to the Russian market. Western partners have canceled ties with Yandex after Russia’s war in Ukraine, including food delivery company Grubhub, which finished its robot delivery initiative with Yandex days after the invasion of Russia. The new export controls also limit the sale of high-tech components to Russia.

There are obstacles to the Yandex. You would need to find a local buyer willing to buy your Russian businesses. It would also need Moscow’s permission to transfer technology licenses out of the country, and Yandex shareholders would have to agree to the plan.

The plan is reportedly supported by Aleksei Kudrin, Russia’s former finance minister. Kudrin is expected to assume a leadership position at Yandex upon completion of the deal, according to the financial times.

Yandex did not immediately respond to a request for comment.

Sanctions and exodus of personnel

Yandex, founded in 2000, controls about 60% of Russia’s search engine market and has invested in transportation, e-commerce and news.

Although not state owned, Yandex has established a close relationship with the Russian government. Yandex in 2019 agreed to give the state a greater say in its operational decisions in a bid to avoid legislation limiting foreign ownership of Russian tech companies.

The NASDAQ stock exchange suspended the listing of Yandex shares shortly after the Russian invasion due to concerns about US sanctions. Yandex shares in Moscow have fallen 60.3% since the beginning of the year. The share drop comes despite Yandex’s strong performance in the Russian market, with revenue up 46% in the third quarter year-over-year.

The Russian tech company has also been affected by the exodus of talented Russians leaving the country following the invasion of Ukraine. More than 10% of Yandex’s 19,000 employees have left, it reported Bloomberg in August.

The European Union has also imposed sanctions on Yandex executives, accusing the company of promoting pro-war Russian propaganda on its news platform. The United States penalized Yandex Deputy CEO Tigran Khudaverdyan, head of the news division, in March.

The EU sanctioned Yandex founder and then-CEO Arkady Volozh in June, accusing him of “materially or financially” supporting the invasion of Russia. Volozh give up as CEO the same day. Yandex sold out its news division to Russian tech company VK in August.

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