How Russia killed its tech business

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How Russia killed its tech business


It has now been over a yr because the full-scale invasion of Ukraine started, with greater than 8,300 recorded civilian deaths and counting. The tech staff who left every part behind to flee Russia warn that the nation is effectively on its option to changing into a village: minimize off from the worldwide tech business, analysis, funding, scientific exchanges, and significant elements. Meanwhile Yandex, one among its greatest tech successes, has begun fragmenting, promoting off profitable companies to VKontakte (VK), a competitor managed by state-owned firms.

“It felt like my country was stolen from me,” says Igor, an govt at VK who has household in Russia and requested that his identify be modified so he might speak overtly. When the conflict started, he says, he felt as if 20 years of Russia’s future had been taken away in a heartbeat.

In Russia, expertise was one of many few sectors the place folks felt they might succeed on advantage as an alternative of connections. The business additionally maintained a spirit of openness: Russian entrepreneurs gained worldwide funding and made offers all around the world. For a time, the Kremlin appeared to embrace this openness too, inviting worldwide firms to put money into Russia. 

But cracks in Russia’s tech business began showing effectively earlier than the conflict. For greater than a decade, the federal government has tried to place Russia’s web and its strongest tech firms in a good grip, threatening an business that when promised to deliver the nation into the long run. Experts MIT Technology Review spoke with say Russia’s conflict in opposition to Ukraine solely accelerated the injury that was already being accomplished, additional pushing the nation’s greatest tech firms into isolation and chaos and corralling its residents into its tightly controlled home web, the place information comes from official authorities sources and free speech is severely curtailed.

“The Russian leadership chose a completely different path of development for the country,” says Ruben Enikolopov, assistant professor on the Barcelona School of Economics and former rector of Russia’s New Economic School. Isolation grew to become a strategic alternative, he says.

The tech business was not Russia’s greatest, however it was one of many principal drivers of the economic system, says Enikolopov. Between 2015 and 2021, the IT sector in Russia was accountable for greater than a 3rd of the expansion within the nation’s GDP, reaching 3.7 trillion rubles ($47.8 billion) in 2021. Even although that constituted simply 3.2% of whole GDP, Enikolopov says that because the tech business falls behind, Russia’s economic system will stagnate. “I think this is probably one of the biggest blows to future economic growth in Russia,” he says. 

The departures start

The temper was tense within the pink brick and glass-lined Yandex workplace in south Moscow on February 24, 2022, the day the Russian invasion of Ukraine started. Anastasiia Diuzharden, then head of content material advertising and marketing at Yandex Business, was there—as had been quite a few others—however she says she noticed few folks working. The constructing’s smoking space had 5 instances extra folks than ordinary. Some staff left the nation that very same day.

As the information of the invasion circulated across the workplace, Diuzharden and her colleagues had been referred to as right into a “khural,” a weekly assembly. There, she says, Tigran Khudaverdyan, Yandex’s govt director and deputy CEO, reassured them that the corporate would proceed working. 

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