More than four months after the start of the Russian invasion of Ukraine, the future of Yandex, “the Russian Google”, looks very uncertain. This emblematic flagship of Russian tech, which had acquired the unofficial title of “the coolest company in Russia”, as the New York Times recalls, is mired in difficulties and the subject of much speculation.
It’s even “a fairly emblematic example of the problems encountered by Russian tech companies”, notes the doctoral student in geopolitics Marie-Gabrielle Bertran, a specialist in software development in Russia. Or firms torn between the openness to the world demanded by digital technology and the requirements of a Russian power which withdraws into itself. “There is a clear difference between the reassuring speech of Yandex and the fall of its share price”she notes.
Yandex, legally structured as a Dutch holding company and a company under Russian law, thus welcomed strong growth in financial results for the first quarter. And this despite “the impact of geopolitical developments”, the euphemism to describe the war in Ukraine. The next financial results, expected on July 26, will show if this trend is confirmed.
Decapitated top management
But while it peaked in capitalization at around $30 billion in the fall of 2021, that company’s value has plummeted 80% — its Nasdaq listing has been suspended since the start of the Russian invasion. Originally a simple search engine imagined from 1993, Yandex has diversified in all directions. The services offered by the firm range from delivery to robot taxis, including audio streaming, the cloud, drones and video games.
In addition to this stock market storm, the company’s top management was beheaded. Under pressure from the European Union, the co-founder Arkady Volozh, the CEO of the search engine, had to leave his executive functions and the board of directors a month ago. Three months earlier, Tigran Khudaverdyan, Yandex’s number two, had also had to resign from his mandates in March, for the same reasons.
Sanctions against the leaders justified, according to the Council of the European Union, by the fact that the company plays a role in the concealment of information on the war. Yandex was also recently singled out for its maps service, where the exact borders between Ukraine and Russia have disappeared. Questions shared internally, a sign of a tug of war between the teams. General manager Elena Bunina has resigned, while Tonia Samsonova, a director of the group, posted her resignation letter on Instagram.
The sale of News and Zen still pending
Yet Yandex had a plan to get out of the rut. It had thus announced at the end of April the future sale of its Yandex News and Zen services. Two information-related services that have become particularly toxic with the war and the strengthening of the Kremlin’s control over Russian society. But despite an agreement in principle with VK, the Russian “Facebook”, the sale is still on stand-by.
Beyond this sale project, the Russian-speaking press wonders about a more in-depth reorganization of the group. Thus, Meduza, an independent media outlet critical of Russian power, announced a plan to split Yandex into two entities, one Russian, and a second international structure. This information was denied by Yandex.
The operation would then resemble that announced by the cybersecurity firm Groupe-IB, which has just announced the separation of its Russian and international activities. The Israeli media Calcalist has also reported the approaches of Yandex, interested in moving the world headquarters of the firm from Russia to the Jewish state. According to Elena Bunina, interviewed by the New York Times, a significant part of the company’s employees now work outside Russia.
But such a split would not be simple. As The Bell reminds us, it would then be necessary to decide on the sharing of the intellectual property, the teams and the financing of the projects, while succeeding in convincing the Kremlin of the interest of such an operation. “A separation of the group into several entities would look like a last resort to allow the survival of the group”, analyzes Marie-Gabrielle Bertran. “We can imagine a sale by cutting for the benefit of clans close to the Kremlin, also wonders the researcher Julien Nocetti. But if you withdraw services, will the building still hold?