October 4, 2022

What difference does war make?

Just a few months ago, Yandex emerged as a rare Russian business success story, growing from a small start-up to a tech giant that not only dominated searches and rides across Russia, but boasted a growing global reach.

Yandex app can park a taxi in remote cities such as Abidjan and Ivory Coast; Oslo, Norway; or Tashkent, Uzbekistan; The company has delivered groceries in London, Paris and Tel Aviv. It runs fifty experimental Yandex robots across the Ohio State University campus in Columbus, fetching food orders from Grubhub for students — with plans to expand to about 250 US universities.

Often called “the coolest company in Russia”, Yandex employed more than 18,000 people; Its founders were billionaires. At its peak in November, its value reached more than $31 billion. Then Russian President Vladimir Putin invaded Ukraine.

Almost overnight, as Western investors pulled out of Russia and Western governments imposed harsh economic sanctions, its value plummeted to less than $7 billion. Nasdaq has suspended trading on its shares.

A sudden aversion to most things Russian has prompted the company to close several international businesses, including delivery services in London, Paris and Columbus.

Thousands of employees – nearly a sixth of the total – have fled the country. Its founder, Arkady Voloz, and his first deputy stepped down after the European Union imposed sanctions on both, accusing them of inciting to mislead the Kremlin.

The company does not face bankruptcy. But the sudden change in his fortune serves not just a cautionary tale for investors in an authoritarian country dependent on the whims of a single ruler. Yandex is also a symbol of the problems faced by Russian companies in the radically changing economic landscape and the growing divisions over war in society as a whole.

Established as an Internet search engine even before Google, Yandex has offered myriad services, including e-commerce, maps, music streaming, cloud storage, and self-driving cars. Foreign investors liked it, and for Russians it was a virtual genie – a mixture of Google, Uber, Amazon and Spotify all rolled into one. But the company had an Achilles heel, which was withheld until the invasion of Ukraine.

Its success as a search engine and service provider, like that of Google and the success of other social media giants, is based on the trust of the public. Before the war, about 50 million Russians visited his homepage daily, with the Five Headlines list being a major source of information for many.

Yandex executives and users came to accept the Kremlin’s management of news sources, but viewed them as a limited slice of a sprawling, pioneering tech empire. With the invasion and the Kremlin suppressing any public discussion of the war, Yandex quickly became the subject of jokes.

On the Internet, some users mocked its long-standing slogan “Yandex. You can find everything”, like “Yandex. You can find everything but the truth” or “Yandex. You can find everything but the conscience”.

“Yandex was like the island of freedom in Russia, and I don’t know how it could last,” said Elena Bonina, a mathematics professor whose five-year term as Yandex CEO ended in April, when she immigrated to Israel.

Interviews with 10 former and current Yandex employees reveal an image of a company caught between two irreconcilable matters. On the one hand, it needs to meet the demands of the Kremlin, which is determined to stifle any opposition to what it is disguising as its “special military operation” in Ukraine. On the other hand, Western governments, investors and partners are horrified by the Russian war, as well as by the more mundane sectors of their Russian public.

“They need to find a way between those two things, and it’s kind of impossible,” said Ilya Krasilchik, who resigned from the management of Yandex Lavka, the express grocery delivery service, after facing criminal charges for publishing photos of the Bucha massacre by Russian forces. . “In any other case, it would be a perfect 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 generate about 60 percent of web searches in Russia. (Dr. Bonina said Google has about 35 percent.)

Before Yandex, Russian taxis consisted of random drivers trying to earn a few rubles. Uber tried to enter the market, but eventually relented and became a partner with Yandex in Russia and many countries of the former Soviet Union. Yandex Taxi has expanded to about 20 countries.

Like many successful companies in Russia, especially those engaged in news in any form, Yandex quickly caught the attention of the Kremlin. Observers of Mr. Putin’s image inevitably noticed that news critical of Mr. Putin repeatedly appeared on Yandex.News, the company’s aggregator. During street protests in 2011 and 2012, and then the attacks on Crimea and eastern Ukraine in 2014, Kremlin officials sought to adjust the list of acceptable news sources and sometimes even individual headlines.

Yandex tried to backtrack by explaining that the algorithm automatically generated the list from thousands of sources based on popularity.

“The pressure on us has been mounting since 2014, and we have done everything we can to maintain a neutral role,” John W. Boynton, the American businessman and its chairman, said in an interview in June. “We don’t get involved in politics, we didn’t want to.”

But Yandex was too big to engage in 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 was arguing about more control over the company’s management structure.

“They were making it easier to get the leads if they wanted to,” said Esther Dyson, one of the Americans who resigned from the board when the war began. She said it had become clear that the Kremlin was “moving towards total control”.

After the invasion on February 24, Putin quickly signed a law criminalizing the dissemination of “false news” about the military, subject to penalties of up to 15 years in prison and heavy fines. What used to be a problem to be dealt with, fending off the Kremlin while maintaining an image of independence, suddenly became a crisis.

For users like Tonya Samsonova, a tech entrepreneur who sold her startup to Yandex for several million dollars but was still running it, the effect has been alarming. After I read a story on the Internet from a British newspaper that the Kremlin put the country’s nuclear forces on high alert, I checked the news headlines on Yandex.

There I found a nice story from a state-run agency about “deterrent” forces. Alarmed, she texted several Yandex executives to indicate that she was providing news that would mobilize opposition to the war; That evoked an assertive “no,” she said.

Ms Samsonova then posted her handwritten resignation letter on Instagram, accusing the company of concealing the deaths of civilians at the hands of the Russian military.

“It’s not accurate by design and management knows that,” Ms Samsonova said in an interview. “It’s a crime to keep doing that when your country invades another country.”

Aleksei Navalny, the imprisoned opposition leader, wrote on Twitter: “Do not forget that the main advocate of war is not TV at all, but the Russian IT giant Yandex. “

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

The company responded to the accusations that it was spreading misinformation by saying that it was in the hands of Russian law, and that it wanted to preserve the livelihoods of its employees and the interests of its investors.

Fully aware that the government has wrested control of another social media giant, VKontakte, which is the equivalent of Facebook, Yandex executives tread carefully, worrying about a similar nationalization.

Faced with internal questions, Dr. Bonina said, during a weekly company forum shortly after the war began, she told employees that it would take about 10 minutes to put the independent news on the homepage, no change and probably terminate Yandex because they knew it was.

She said that the executives concluded that as long as they control the Yandex search engine, users can find reliable news about the war from abroad, noting that Russia has not yet become China.

But that proved to be overly optimistic. The company soon announced that it would separate from Yandex.News and Yandex.Zen, a type of blogging platform that has drawn government ire as a primary means of regularly posting videos that Mr Navalny produces exposing Kremlin corruption.

For now, Yandex executives say their main concern is to continue to innovate while the company’s core remains in Russia, cut off from most Western technologies.

“Since the war, we have halted all of our initiatives to suspend our services globally,” said Mr. Boynton.

Dr. Bonina said about 2,500 employees who have left Russia are still abroad, and the pace of departure from the company is accelerating.

Yandex has also spoiled the growing division between employees who remained in Russia and those abroad, which makes conversation difficult, and much less cooperation. Those inside anxiously refuse to discuss war or the world, clinging to information technology, while those left in disgust often want nothing more than to do with their native land.

“Whether you leave or stay, these are different worlds right now, so you won’t understand each other,” said Mr. Krasilchik. “This is not just about Yandex, Yandex is like a country in microcosm.”

Alina Lobzina Contribute to the preparation of reports.

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