How Russia killed its technology industry

More than a year has passed since the start of the general occupation of Ukraine. More than 8,300 civilian deaths were recorded and counted. Tech workers who have left everything behind to flee Russia warn that the country is poised to become a virtual village: from the global tech industry, research, funding, scientific exchanges and critical mass. Meanwhile, one of its biggest tech successes, Yandex, has begun to break up, selling off profitable businesses to state-owned rival VKontakte (VK).

VK executive Igor, who has family in Russia, said: “I felt like my country had been stolen from me and, frankly, asked to change its name.” When the war began, he said, he felt as if Russia’s 20-year future had been snatched away in a heartbeat.

In Russia, technology was one of the few fields where people felt that they could succeed on merit rather than on connections. The industry maintained a spirit of openness: Russian entrepreneurs won international funding and made deals all over the world. For a while, the Kremlin seemed to welcome this openness, inviting international companies to invest in Russia.

But cracks in Russia’s technology industry began to show well before the war. For more than a decade, the government has tried to tighten control of Russia’s internet and its powerful tech companies, threatening an industry that once promised to bring the country forward. Experts interviewed by MT Technology Review say Russia’s war on Ukraine has not only accelerated the damage already being done, but also pushed the country’s biggest tech companies into isolation and chaos, forcing its citizens into a tightly controlled domestic internet. And freedom of speech is severely curtailed.

“The Russian leadership has chosen a completely different development path for the country,” said Ruben Inikolopov, assistant professor at the Barcelona School of Economics and former director of Russia’s New School of Economics. He says isolation became a strategic choice.

The technology industry was not Russia’s largest, but it was one of the main drivers of the economy, Enikolopov said. In the year Between 2015 and 2021, the IT sector in Russia will account for more than a third of the country’s GDP growth. By 2021, it will reach 3.7 trillion rubles ($47.8 billion). Although this is only 3.2% of the GDP, according to Enikolopov As the technology industry slows down, the Russian economy slows down. “I think this can be one of the biggest factors for the future growth of the Russian economy,” he said.

The origins begin

In the year In the year On February 24, 2022, the day Russia’s invasion of Ukraine began, the mood was tense inside the red-brick and glass-enclosed Yandex office in south Moscow. Anastasia Deusharden, then head of content marketing at Yandex Business, was there – like a number of others – but says she saw few people doing it. The building’s smoking area had five times as many people as usual. On the same day, some workers left the country.

When the news of the raid spread around the office, Deusharden and her colleagues were called to the “khural” for a weekly meeting. There, Yandex CEO and Deputy CEO Tigran Khudaverdian assured them that the company will continue to operate.

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