Russian Internet Giant Divided: Could Yandex Split in Two?
Russian internet giant Yandex has spoken of breaking into a Russian business and an outside-of-Russia business. Here's some data on the possibilities.
Russian internet giant Yandex, which operates in everything from search to cloud, has spoken repeatedly in past months about possibly splitting the business in two. In light of sanctions against Russia, growing technological isolationism in Russia, and other challenges, the idea would be to spin out a Russia-only Yandex company — and a Yandex operating in the rest of the world. Here’s what to know, based on a data analysis we conducted recently for our client Margin Research. Brought to you by Global Cyber Strategies, a Washington, DC-based research and advisory firm.
The One-Liner
Yandex has sparred with the Kremlin for years over its corporate management and ability to operate independently from the state — and its high number of staff in Russia is likely to greatly complicate its efforts to potentially split the business in two.
Yandex’s Offices and Job Vacancies
I just published a data-driven analysis for our client Margin Research (a New York-based cybersecurity research firm) on Yandex, where we used artificial intelligence (AI)-driven capabilities and large volumes of open-source data to examine Yandex’s open-source code bases, its global base of contributors to that code, its office locations worldwide, and its publicly listed job vacancies. This article draws from that analysis. As the analysis began:
Russian internet company Yandex has been in the news recently, and not just because it’s one of the leading and most globally reaching technology firms in Russia. The company, founded as a search engine in 2000 and now worth billions of dollars, announced plans in November 2022 to potentially restructure the company—to possibly include taking one of its cloud, educational technology, data labeling, self-driving technology, or other divisions and operating it independently from the Russian Yandex.
This follows a years-long battle between Yandex and the Kremlin. In October 2019, the Russian government said it would restrict foreign entities’ investments in Russian technology companies—dropping Yandex’s shares by 17% and its worth by more than $1 billion in just minutes. Disputes ensued, and the following month, Yandex announced a new governance board that would give Russian government officials the power to veto deals and transactions, appoint board members, block the company from entering into agreements, and even suspendYandex’s CEO. Since the Putin regime launched its illegal war on Ukraine in February 2022, tensions have increased. In August 2022, Yandex sold off its media assets to government-backed internet firm VK (formerly, VKontakte) after trying to distance itself from state propaganda.
Fast-forwarding to the present, Nasdaq and the New York Stock Exchange recently announced they are delisting Yandex, along with four other Russian tech firms (HeadHunter, Ozon, Qiwi, and Cian). This comes after Nasdaq had suspended trade in Yandex Class A shares on February 28, 2022, just four days after Vladimir Putin began the Russian government’s illegal, full-scale war on Ukraine. Further, a proposed tech acquisition in Italy was just vetoed by the prime minister because one company had funding from Yandex. “They were basically told that as long as they’re connected to a Russian company, it’s not going to work,” one source told Reuters.
Yandex, as of December 2020, has 60 office locations around the world.
These offices span Russia, Serbia, Kazakhstan, Israel, Armenia, Belarus, the Czech Republic, France, Uzbekistan, the United States, China, and Taiwan, among several others. It has 39 offices in Russia, with its headquarters located in Moscow. It has two offices in the US, one in Newburyport, Massachusetts and one in Palo Alto, California. It also has an office in Shanghai, China as well as Taipei, Taiwan (which Yandex on its website placed under the “China” list of country offices).
I also compiled data on the job vacancies listed on Yandex’s English-language and Russian-language websites, as of December 2020. The analysis post for Margin Research has visualizations, which show that approximately 50% of Yandex’s English-language website job postings were listed in Russia, followed by Serbia (approximately 18%), Kazakhstan (approximately 7%), Israel (approximately 7%), and Armenia (approximately 7%). For the Russian-language Yandex website, approximately 74% of all listed job vacancies were listed in Russia, followed by Serbia (approximately 10%), Kazakhstan (approximately 8%), and Armenia (approximately 7%).
Yandex’s Open-Source Code Base and Global Contributors
Like many companies, Yandex has a number of open-source code bases to which individuals contribute — and on which there is a large amount of public data.
As I described:
We ingested data from 154 Yandex GitHub repositories—including from Yandex Cloud and Yandex proper—ran SocialCyber AI analysis on the data, and zoomed in specifically on the time zones from contributors. We found that most emails contributing to Yandex’s collection of GitHub repositories, over time, appear to be based in the UTC+03:00 time zone, which covers East Africa, part of Asia, part of Eastern Europe, and part of Russia (see below figure). The relevant time zone for each email contributor was identified based on the time zone from which that email contributed the most.
The majority of the emails contributing to Yandex’s GitHub repositories (over 2,500 of them) appeared to be doing so from the UTC+03:00 time zone, which encompasses East Africa (e.g., Comoros, Djibouti, Ethiopia, Kenya, Somalia), part of Antarctica, parts of Asia (e.g., Bahrain, Iraq, Jordan, Qatar, Saudi Arabia), part of Eastern Europe (e.g., Belarus, Turkey, Ukraine, the Abkhazia and South Ossetia regions), and part of Russia (including the Central Federal, Northwestern Federal, and Volga Federal districts). The graphic below captures the UTC time zone breakdowns.
Theoretically, Yandex could have its outside-of-Russia business leverage the talents of software developers located in Russia, but that could undercut the very purpose of its bifurcation plan — a financial, technological, managerial, and public relations separation of its business assets and activities. Yandex, if it pursued this plan, would have to ensure that it has the necessary workforce to support a split-up business.
Given how much of its talent base currently appears to be located in Russia, it is unclear this objective is easily achievable at any point in the near term. Technological isolation, for the Russian internet giant, may remain the name of the game.
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