Sanctions hit Russia’s largest internet company hard

Storage capacity is not the only thing that the Russian IT industry will lack in the near future. The major internet concern Yandex will also experience noticeable problems with other hardware if the Western embargo lasts for an extended period of time. Yandex is the largest provider of various internet services in the Russian-speaking region – ranging from search engines and email services to car-sharing and food delivery services.

To this end, the company operates several large data centers that must be continuously supplied with new servers and replacement components. However, the embargo is causing huge problems. According to a report by the US news agency Bloomberg, which relies on two sources of knowledge of the company’s internal processes, the lack of semiconductor products, in particular, will cause problems within a year for up to 18 months. Because the western states and also the west-oriented countries of Asia – such as South Korea or Taiwan – no longer supply so-called dual-use technology to Russia. This includes components that can also be used for military applications.

Do sanctions work?

Yandex’s management would be working behind the scenes on various options to deal with the foreseeable difficulties ahead of time. For example, efforts are being made to build new partnerships that mitigate the sanctions. Talks are also underway with state-controlled internet group VK over the sale of the news business and social media platform Zen.

The effect of the sanctions against Russia will not only be felt at Yandex by the lack of hardware supplies. The company’s stock market cap was $31 billion last fall and has shrunk to $6.8 billion since the invasion began in Ukraine. Co-CEO Tigran Khudaverdyan was also forced to resign to avoid further damage to the company. The EU had personally put him on a sanctions list for attending a meeting in the Kremlin just before the attack on the neighboring country.