Moscow's Google competitor Yandex is cutting its roots

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Logo of Yandex parent company Yandex NV

Photo: Kirill Kudryavtsev / AFP

A sensational and politically significant divorce is taking place in the IT industry: The Yandex Group, which once became large, successful and very profitable in Russia as a search engine and Google competitor, is selling its Russian business to Russian investors. The parent company of the group Yandex NV, which has long been registered in the Netherlands, is entering into a deal with a group of investors. The consortium includes parts of the Moscow Yandex management, an investment company of the Russian oil company Lukoil, the investor Alexander Chachava, who is well-known in Russian IT circles, and several other investors.

In return, Yandex's existing shareholders will receive around five billion dollars. This corresponds to a discount of around 50 percent on the estimated current company value. The reason: Russian law stipulates that companies from “unfriendly states” must accept such a discount if they want to withdraw from the Russian market. Yandex has officially operated as a Dutch company since its IPO 15 years ago.

Criticism of the “barbaric war”

However, the Dutch Yandex parent also gains control over four international Yandex business areas that are considered to have a promising future: These include the AI ​​companies Nebius and Toloka, the company Avride, which develops self-driving cars, an education start-up and Yandex's data centers in Finnland. A Yandex core team led by founder Arkadi Volosch wants to form a new, international tech group from these future technologies.

Volosh, 59, moved his life to Israel after the annexation of Crimea by the Kremlin in 2014. Wolosh is one of the few Russian entrepreneurs to have voiced criticism of Russia's incursion. He described the attack on Ukraine as “barbaric.” The EU's sanctions against Volosh remained in force. The reason for their imposition was, among other things, the role that Yandex plays in the spread of Kremlin propaganda on the Russian Internet. In particular, the algorithm of the Yandex.News service, which for years, in accordance with Russian law, practically only reported hits from media loyal to the Kremlin, was criticized. However, Yandex had already sold the service in autumn 2022 to VK, an internet company controlled by the Kremlin that originally emerged from the social network VK of the same name.

The splitting of Yandex had already become apparent shortly after the start of the war against Ukraine in February 2022. At that time, thousands of Yandex programmers rushed to leave Russia, as did parts of top management. Most of these employees remained connected to the company despite leaving Russia: Yandex quickly expanded foreign offices like the one in Tel Aviv. These branches will now become the nucleus of the new, globally active company.