Yandex wants to leave Russia amid Ukraine war

Yandex, the company often described as “Russia’s Google”, is seeking Vladimir Putin’s blessing to sell its operations in the country, spin off its main international projects and appoint a longtime confidant of the Russian president to manage its relationship with the Kremlin. Three people familiar with these moves said that the internet giant has informally enlisted top economic official Alexei Kudrin to win the Russian president’s approval, in principle, for the restructuring plan. The changes would lead to Yandex’s Dutch holding company exiting the Russian market by selling its entire business apart from the international divisions of four key units.

The plan is aimed at sparing parts of Russia’s biggest tech success story from the disastrous consequences of Putin’s war in Ukraine, which has prompted several thousand Yandex staffers to flee the country. The restructuring appears to be an acceptance that Yandex’s ambitions of being a global internet giant are over, with Western investors and key partners distancing themselves from the Russian group following the invasion. When New York’s Nasdaq exchange suspended trading in its shares in February, Yandex’s market capitalisation had fallen to $6.8bn, down from more than $30bn just a year ago. If Putin gives his final assent at their meeting on Thursday, Kudrin is expected to depart his current role heading the Audit Chamber, a government accountability body, for a leading position at Yandex, the people said. Though Kudrin’s future position remains undefined, his role will in effect be to serve as Yandex’s krysha, or “roof” — a term denoting high-level political protection, two of the people said. “Kudrin is one of the people who can be a super krysha — in a good sense,” one of the people said. “He’s been personally trusted by the president for many years . . . and his values are similar to Yandex values.”

Yandex hopes the restructuring plan will save four of the company’s most promising new international ventures — in self-driving cars, cloud computing, education technology, and data labelling — by ending their ties to the toxic Russian market, according to several people close to the company. The nascent but small businesses previously relied on partnerships with major US technology companies as well as servers, chips and processors western sanctions bar producers from shipping to Russia. Yandex also hopes Kudrin will secure a future for its far larger Russian business at a time when the Kremlin is vastly increasing the state’s control over the economy and the internet amid a mass exodus of foreign companies. A former longtime finance minister, Kudrin, 62, will become the most senior Russian official to leave office since Putin ordered the invasion of Ukraine in late February. 

The group’s international ventures including self-driving cars and cloud computing have been badly hit by western sanctions 

Kudrin and Putin have worked together since their days in the St Petersburg mayor’s administration, where the future Russian president cut his political teeth in the early 1990s.

“There are very few people who care about keeping [Yandex] private but have the ear of the big guy,” one of the people said. Like many of Russia’s top economic officials, Kudrin privately opposes the war, according to two people close to him, but has not spoken out against it or criticised Putin. Kudrin did not immediately respond to a request for comment.

Meanwhile, Arkady Volozh, the company’s founder who lives in Israel, is also horrified by the war and has not returned to Russia since it began, according to friends. Yandex has made no public statements on the invasion, leaving it vulnerable to accusations of complicity by promoting the Kremlin line.

In June, Volozh resigned as chief executive and transferred voting rights from his controlling stake to the board after the EU sanctioned him for what it said was Yandex’s role in “promoting state media and narratives in its search results, and deranking and removing content critical of the Kremlin.” Tigran Khudaverdyan, then Volozh’s top deputy, wrote on Facebook in March that the “situation is unbearable” and “war is monstrous” but said Yandex would not “climb on an armoured car” in order to protect its employees and businesses. That stance failed to convince many of Yandex’s own staff, several of whom quit in protest, or the EU, which sanctioned Khudaverdyan soon afterwards, citing his attendance of an oligarchs’ roundtable with Putin on the day of the invasion. Khudaverdyan resigned and is appealing against the sanctions. Several thousand more of Yandex’s employees have left the country during the war — either to work on spinning off the international projects, flee the Kremlin’s sweeping crackdown on dissent, or escape being forcibly drafted into the Russian army.

Yandex sold its news aggregator, blogging platform and homepage to state-controlled social media company VK in August after facing criticism over the media assets’ role in the war. Kudrin has hammered out the deal with Putin and his top domestic policy aide Sergei Kirienko, the people said. Kirienko is also in charge of Russia’s stumbling efforts to annex four Ukrainian provinces and his son is chief executive of VK. Yandex already gave the Kremlin veto power over key governance issues in a 2019 deal overseen by Kirienko, though the official never exercised his so-called “red button”. But people close to Volozh say Yandex’s Russian business needs the new deal to ensure it remains in private hands. Under the restructuring deal, Kudrin and Yandex have discussed the official assuming a small equity stake and taking on an undefined role heading up Yandex’s governance. Yandex’s Russian management will retain control of the company’s day-to-day operations, but delegate the company’s increasingly sensitive relations with the Kremlin to Kudrin, the people said. The deal would require the consent of Yandex’s shareholders.

Though discussions remain at an early stage, several Kremlin-friendly Russian oligarchs have expressed interest in a stake in Yandex, according to people familiar with the matter.

They include metals magnate Vladimir Potanin, who bought SocGen’s Russian subsidiary and leading digital bank Tinkoff for knockdown prices in the spring, the people said. Any potential sale would be complicated by sanctions against the possible buyers, they added. Yandex, the Kremlin, the Audit Chamber and Potanin did not immediately respond to requests for comment.