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Yandex plans to break up with its Russian motherland

'Geopolitical environment' leads to spin-out of cloud, self-driving and other tech

Russia's most prominent tech company, Yandex, has announced steps to move some of its intellectual property out of Putin country and dispose of the rest to local interests.

Yandex is a sprawling conglomerate often characterized as Russia's Google. It started as a search company, then moved into advertising, maps, e-commerce, cloud, and software for self-driving cars.

Like its Silicon Valley analogs, Yandex also looked for a more advantageous jurisdiction for its headquarters and picked The Netherlands, which has for more than a decade been home to holding company Yandex NV.

That entity last Friday published a statement announcing that its board "has commenced a strategic process to review options to restructure the group's ownership and governance in light of the current geopolitical environment."

A special committee of the board is contemplating scenarios including:

  • Development of the international divisions of certain services (including self-driving technologies, cloud computing, data labelling, and edtech) independently from Russia.
  • Divesting Yandex NV's ownership and control of all other businesses in the Yandex Group (including search and advertising, mobility, e-commerce, food-delivery, delivery, entertainment services and others in Russia and international markets), including transferring certain elements of governance to management.

If the board chooses that path, it would leave Yandex NV holding some of the company's offshore operations, with the rest passing to other owners – possibly Yandex management in Russia.

The announcement also states that the company's board "anticipates that Yandex NV will in due course be renamed, with the business to be divested retaining exclusive rights for the use of the Yandex brand."

That means Yandex NV would wash its hands of the Yandex brand, while trying to deal in self-driving tech, cloud, edtech and data labelling activities outside Russia.

Russian state-controlled news agency TASS has characterized the announcement as Yandex departing Russia.

Which appears to be the case. The aforementioned "current geopolitical environment" appears to be the reason for doing so.

Russia's illegal invasion of Ukraine led to it becoming a pariah state. Sanctions against Russia mean local businesses struggle to do business across borders.

The Yandex NV board's plan appears to recognize that carving out some of Yandex's businesses is the only way the company will have a chance to operate and/or grow outside Russia.

The plan does not, however, address the fact that many of the Yandex staff who build and maintain the company's products remain in Russia, or whether regulators would welcome products that are developed within Vladimir Putin's domain – given the former spy's use of state-sponsored cyber criminals and influence operations. Many nations have decided Chinese products are too risky to be allowed to operate within their borders due to the potential for government interference. It's not hard to imagine they would feel similarly about Russian kit.

Many Yandex staff have reportedly already fled Russia, as tech workers are nearly always in demand in nations that don't operate pervasive censorship surveillance and aren't subject to sanctions on imports of the sort of stuff a decently paid techie might enjoy acquiring with their disposable income.

Leaving Russia is also a smart career move for skilled techies, because most global tech companies have left the nation – meaning fewer career opportunities are available.

Russia's government has acknowledged that its invasion of Ukraine could damage its tech industry and the FT reports that Yandex N.V.'s move was probably approved by Vladimir Putin himself.

Russia has responded to the troubles of its tech industry with government funds to stimulate it and develop substitutes for goods it cannot access due to sanctions. The fruits of those efforts are not immediately apparent at the time of writing. ®

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