How the war in Ukraine stirred up Russia’s “coolest company”

What’s the difference war.

Just a few months ago, Yandex stood out as a rare success story in Russian business, going from a small start-up to a tech colossus that not only dominated search and auto search across Russia, but also boasted a growing global reach.

The Yandex app could hail a taxi in remote cities such as Abidjan, Côte d’Ivoire; Oslo, Norway; or Tashkent, Uzbekistan; and the company delivered groceries to London, Paris, and Tel Aviv. Fifty experimental Yandex robots moved around the campus of Ohio State University in Columbus, bringing food orders from Grubhub to students – with plans to expand to about 250 US campuses.

Often referred to as “the coolest company in Russia,” Yandex employed more than 18,000 people; its founders were billionaires; and at its peak last November, it was worth over $31 billion. Then Russian President Vladimir Putin invaded Ukraine.

Almost overnight, as Western investors fled Russia and Western governments imposed tough economic sanctions, its value dropped to less than $7 billion. The Nasdaq stock exchange has suspended trading in its shares.

A sudden distaste for most Russian things prompted the company to shut down various international businesses, including delivery services in London, Paris and Columbus.

Thousands of employees – almost a sixth of the total – fled the country. Its founder Arkady Volozh and his first deputy stepped down after the European Union imposed sanctions on both, accusing them of aiding Kremlin disinformation.

The company is not in danger of bankruptcy. But his sudden reversal of fortune serves as more than a warning to investors in an authoritarian country at the whim of a single ruler. Yandex is also a symbol of the challenges Russian companies face in a radically changed economic landscape and the growing divisions over war in society at large.

Created as an internet search engine before Google, Yandex offered many services, including e-commerce, maps, music streaming, cloud storage, and self-driving cars. Foreign investors liked it, but for the Russians it was a real genius – the combination of Google, Uber, Amazon and Spotify all rolled into one. But the company had an Achilles’ heel, hidden before the invasion of Ukraine.

Its success as a search engine and service provider has been based, like that of Google and other social media giants, on public trust. Before the war, about 50 million Russians visited his homepage every day, where a list of five main headlines was for many the main source of information.

Yandex executives and users were resigned to the Kremlin’s curation of news sources, but saw it as only a limited part of a sprawling, innovative technology empire. However, following the Kremlin’s invasion and suppression of any public discussion of the war, Yandex quickly became the butt of jokes.

Online, some users ridiculed his long-standing slogan “Yandex. Everything can be found”, as “Yandex. You can find everything but the truth”, or “Yandex. Everything can be found, except conscience.

“Yandex was like an island of freedom in Russia, and I don’t know how it can continue,” said Elena Bunina, a mathematics professor whose five-year tenure as Yandex’s chief executive ended in April when she emigrated to Israel.

Interviews with 10 former and current Yandex employees reveal a portrait of a company stuck between two irreconcilable imperatives. On the one hand, he needs to satisfy the demands of the Kremlin, which is determined to stifle any opposition to what it passes off as its “special military operation” in Ukraine. On the other hand, Western governments, investors and partners, frightened by the Russian war, as well as the more mundane layers of the Russian audience.

“They need to find a way between the two, and that’s almost impossible,” said Ilya Krasilshchik, who stepped down from managing Yandex Lavka, its quick grocery delivery service, after facing criminal charges for posting pictures of Bucha. massacre Russian troops. “In any other situation, it would be an ideal company, like Google, like any technology company. But Yandex has a problem, because it is a Russian company.”

Founded by two math wizards in 1997, it has long claimed to account for about 60 percent of Internet searches in Russia. (Google’s share is about 35 percent, according to Dr. Bunin.)

Before Yandex, Russian taxis consisted of random drivers trying to earn a few rubles. Uber tried to penetrate the market, but eventually relented and became Yandex’s partner in Russia and many countries of the former USSR. Yandex Taxi has expanded to around 20 countries.

Like many successful companies in Russia, especially those dealing with news of any format, Yandex soon caught the attention of the Kremlin. mr. Keepers of Putin’s image inevitably noticed that news critical of Putin often featured Putin in Yandex.News, the company’s aggregator. During street protests in 2011 and 2012, and later during attacks in Crimea and eastern Ukraine in 2014, Kremlin officials attempted to edit the list of acceptable news sources, and sometimes even individual headlines.

Yandex tried to object, explaining that the algorithm automatically generates a list of thousands of sources depending on their popularity.

“The pressure on us has been mounting since 2014 and we have done everything we can to maintain a neutral role,” John Boynton, an American entrepreneur and chairman of the board of directors, said in a June interview. “We don’t get involved in politics, we never wanted to.”

But Yandex was too big to stay out of politics, and the Kremlin continued to undermine its independence. New laws forced news aggregators and search engines to use officially approved sources, while the government sought more control over the company’s management structure.

“They just made it easier to pull the strings if they wanted to,” said Esther Dyson, one of two Americans who left the board of directors when the war broke out. It has become clear that the Kremlin is “moving on to total control,” she said.

After Feb. On the 24th invasion, Mr. Putin was quick to sign a law making it a crime to distribute “fake news” about the military, which carries up to 15 years in prison and heavy fines. What used to be a solvable problem—fighting off the Kremlin while maintaining an image of independence—suddenly turned into a crisis.

For users like Tonya Samsonova, the tech entrepreneur who sold her startup to Yandex for several million dollars but still ran it, the consequences were ugly. After reading a British newspaper article on the Internet that the Kremlin had put the country’s nuclear forces on high alert, she checked the headlines on Yandex.

There, she found an insipid story from a government agency about “containment” forces. Alarmed, she wrote to several Yandex executives to offer to present news that would rally opposition to the war; which prompted a firm no, she said.

RS. Samsonova then posted a handwritten letter of resignation on Instagram, accusing the company of hiding the facts of civilian deaths committed by the Russian military.

“This is not exactly by design, and management is aware of this,” Ms. said. Samsonova said in an interview. “It’s a crime to keep doing this when your country is invading another.”

Imprisoned opposition leader Alexei Navalny tweeted: “Don’t forget that the main promoter of the war is not television at all, but the Russian IT giant. Yandex.

In its first sanctions against a top executive, the EU cited online accusations of disinformation made by the former head of Yandex.News.

The company has responded to allegations of disinformation by saying that Russian law ties its hands and that it wants to preserve the livelihoods of its employees and the interests of its investors.

Keenly aware that the government had wrested control of another social media giant, VKontakte, a Facebook counterpart, Yandex executives acted cautiously, fearing such a nationalization.

Faced with internal questions, Dr. Bunina said that during a weekly corporate forum shortly after the war broke out, she told employees that posting independent news on the home page would last about 10 minutes, bring no change, and potentially end Yandex as they knew it.

Executives believed that as long as they controlled the Yandex search engine, users could find reliable news about the war from abroad, she said, noting that Russia is not yet China.

But this turned out to be too optimistic. The company soon announced that it would spin off Yandex.News and Yandex.Zen, a blogging platform of sorts that had drawn the government’s wrath as the main vehicle for distributing videos that Mr. Navalny regularly produced exposés of Kremlin corruption.

For now, Yandex executives say their main concern is to keep innovating while the company’s heart remains in Russia, cut off from most Western technology.

“After the war, we suspended all our initiatives to globally terminate our services,” Mr. Boynton.

About 2,500 employees who left Russia remain abroad. Bunin, and the pace of leaving the company is accelerating.

Yandex is even more baffled by the growing gap between employees who remain in Russia and those outside, making it difficult to even communicate, let alone collaborate. Those inside anxiously refuse to discuss war or peace sticking to IT, and those who leave in disgust often want nothing to do with their native land.

“Whether you leave or stay, these are now such different worlds that you won’t understand each other,” he said. said the Dyer. “It’s not just about Yandex, Yandex is a country in miniature.”

Alina Lobzina made a report.