Yandex, a company often referred to as “Russia’s Google”, has become increasingly isolated as Western investors and key partners abandon it in the wake of Vladimir Putin’s war in Ukraine.
More than 75% of the company’s value has been wiped out in the past six months, plummeting sharply when Russian forces launched attacks last week. Trading in the company’s shares was halted on Monday of last week because of volatility.
Widely seen as one of the jewels of the Russian technological scene, Yandex has gained a strong position in its home country, while showing ambition to grow abroad, offering internet services in Germany and Turkey and creating research and development branches in Silicon Valley (USA) and elsewhere.
In recent days, Western tech groups with close ties to Yandex, such as transport service Uber, food delivery group Grubhub and search engine DuckDuckGo, have made moves to end partnerships with the Moscow-based company.
“We are all shocked by what happened,” a senior Yandex figure told the Financial Times. “None of us expected Russia to go to war. Sanctions are coming, fast and hard, and the impact they are having on our operational capability is really challenging.”
While there are no specific Western sanctions against Yandex or its executives, the source said that, over time, the spillover effects would not allow the company to function properly. “There will come a point where we won’t be able to get the technology we need to grow our business,” the person said.
The rush by Western corporate groups to decouple their operations from Russia has destroyed prospects that Yandex could become a significant player on the global tech scene, observers said.
The company said plans to offer cloud computing services to EU customers, including a $30 million investment in Germany that was due to come online this year, had been “temporarily” put on hold.
“They will now be a ‘Russian’ company — an aggressor’s company, no longer a Russian miracle,” said a Russian academic who requested anonymity for fear of repercussions in the Kremlin.
“I wouldn’t say that [a Yandex] missed an opportunity forever, but shared projects with other countries, buying up promising international startups — that won’t happen anytime soon.”
Founded in 1997, Yandex spent years cultivating an image that it was far enough from the Kremlin to be considered a safe investment.
The company began trading on the Nasdaq exchange in New York in May 2011, and at its peak last November, it had a market cap of more than US$30 billion, compared with less than US$30 billion. $7 billion (R$36 billion) today.
On Monday, Uber announced it would remove three of its executives from the board of Yandex.Taxi, the ride-hailing joint venture the companies formed in 2017.
Uber said it was looking to “accelerate” the sale of its 29% stake, after previously declaring it would sell it over two years because of “recent events”.
An agreement allowing Yandex to use the Uber brand in Russia and several other markets was still in place and would last until 2030 if a call option for the American group’s remaining stake was exercised.
Uber declined to comment.
Food delivery service Grubhub, which in August last year announced a deal with Yandex to provide autonomous robots to transport orders on US college campuses, told the FT it would end its partnership that put about 100 robots on the streets.
“We are working with our partners on campus on alternative service options as we move away from Yandex over time,” said a spokesperson for Grubhub.
During a congressional hearing on Tuesday, US privacy-centric search engine DuckDuckGo said it has stopped using Yandex to provide non-news links on its search engine in Russia and Turkey.
“In light of Russia’s attack on democracy in Ukraine, we have terminated our relationship with Yandex,” said Katie McInnis, head of US policy at DuckDuckGo.
A Yandex spokesperson declined to comment on third-party moves regarding the use of its services, and that the company would not give an assessment on the future of its domestic and international business. Also, the status of a car autopilot in Michigan was unclear at the time of writing.
“Right now, it’s not about business,” said a Yandex spokesperson.
“We are protecting and providing necessary services to tens of millions of people living in Russia, such as electricity, running water and a functioning internet.
“The taxis need to reach their destinations and the groceries need to be delivered. The infrastructure needs to work. Our main objective is to ensure the continuous access and operation of these services.”
The company has yet to make a public statement about the war, although its chief executive, Tigran Khudaverdyan, wrote on Facebook, in response to staff comments, that the situation was “unbearable” and “monstrous”.
The falling share price and the ruble meant that many of the company’s 18,000 employees, who receive much of their compensation in shares, were in a state of near “panic”, the company’s top official said.
Sources said Russia’s actions are causing distress among employees who, mirroring the Silicon Valley giants it tries to emulate, tend to be young and global-minded.
“I consider the company’s actions a crime and complicity in war and assassinations, and I don’t want to be a part of it,” wrote Ruslan Musaev, manager of the Yandex project, announcing his resignation with a Russian-language post on Facebook.
Musaev was one of several Yandex employees who publicly denounced the company, focusing on the selection of news that Yandex’s algorithms highlight on its highest-traffic pages.
Lev Gershenzon, a former news chief at Yandex, told the FT that while the company was not a state broadcaster, its news filters amplified the Kremlin-sanctioned message to tens of millions of people every day, giving an inaccurate picture of reality in Ukraine.
In a Facebook post, Gershenzon wrote to his former colleagues: “It’s not too late to stop being an accomplice to a terrible crime. If you can’t do anything — get out.”
Translated by Luiz Roberto M. Gonçalves
I have over 8 years of experience in the news industry. I have worked for various news websites and have also written for a few news agencies. I mostly cover healthcare news, but I am also interested in other topics such as politics, business, and entertainment. In my free time, I enjoy writing fiction and spending time with my family and friends.
