Deemed "Russia's Google", Yandex is looking to cut ties amid Russia's invasion of Ukraine.

With a once promising future and a symbol of entrepreneurship on par with the behemoths of Silicon Valley, the Company is now faced with a shaky future. In addition to getting delisted on the U.S. stock exchange in March 2022 after the stock price fell 77% in March 2022, the Company is now facing restructuring of ownership and governance in light of the war.

On November 24, President Vladimir Putin ordered his government to establish a national artificial intelligence strategy "into every national initiative" and demanded that cloud services be promoted within its borders, precisely one of the activities that Yandex will see axed. President Vladimir Putin has appointed long-time ally, Alexei Kudrin, as a senior leader at Yandex to lead the Company's restructuring.

As part of the restructuring, Yandex N.V. will lose all control and ownership of Yandex Group and a new Russian-incorporated entity will be created, taking control of all Russian assets, while foreign assets will be sold.The new entity will be led by Alexei Kudrin who will obtain a 5% stake in the new company. He is considered to be a close ally and confidant of President Putin and part of his inner circle. Kudrin will be stepping down from his current position as head of the Audit Chamber, an independent auditor and government fiscal watchdog.

In a press release published on Yandex's official page, the goal of the restructuring efforts is "to ensuring the sustainable development and success of the group's diverse portfolio of businesses over the longer term.:. The website also highlighted two key steps in the process:

  1. "Development of the international divisions of certain services (including self-driving technologies, cloud computing, data labeling, and ed-tech) independently from Russia"
  2. "Divesting Yandex N.V.'s ownership and control of all other businesses in the Yandex Group (including search and advertising, mobility, e-commerce, food-delivery, delivery, entertainment services and others in Russia and international markets), including transferring certain elements of governance to management."
As part of the deal, Volozh will be allowed to keep any foreign assets not sold as well as a minority stake in the Russian operations and limited licensing rights to develop Yandex-originated ventures abroad. Volozh fled Russia at the onset of the war and now lives in Israel. Volozh has steadfastly criticized the war, and since its commencement, Yandex has relocated thousands of workers to neighboring countries.

In order words, the restructuring is meant to limit or even completely remove the power of any sanctions placed on the search giant as well as protect the government from any technological meddling or hacking. President Putin has embarked on a campaign to replace any and all Western-originated goods and services with local substitutes (having already replaced McDonalds (MCD  ), among other brands). Next on the list - homegrown tech.

This all bears the question whether this was initiated by the parent company to shield its business from the war or whether President Putin's regime forced the Company into an ultimatum. Regardless this proves that virtually no company with operations in Russian is immune to Kremlin's regime and that we are only seeing the tip of the iceberg.

While this could signal the end of Yandex's reign it is without a doubt the beginning of a major social, political, and economic transformation.