Is Russia’s Google Finished?

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Yandex NV dominates the Russian market, with a majority of all Russians visiting its platforms every month. It offers the nation’s most popular search engine, an e-commerce portal, and even ride sharing.

But now Russia’s premiere tech company’s days may be numbered.

Yandex’s stock is down 75% from its peak last fall. Partnerships with Uber and Grubhub are being wound down since Russia invaded Ukraine.

Yandex’s ambitious expansion overseas is dead in the water. A plan to offer cloud computing in Europe has been shelved.

Indeed, it will be hard to do any business overseas with the banks Yandex relies on within Russia facing crippling sanctions.

But the most immediate threat to Yandex may lie in obscure covenants on its debt.

The Securities and Exchange Commission has suspended trading in its Nasdaq-listed shares. A long enough suspension may trigger a requirement for Yandex to immediately repay $1.25 billion to owners of its convertible bonds.

Yandex does not have the money.

Meanwhile, the company’s staff are nervously eyeing the exits.

Yandex employees’ compensation is largely in stock, which has lost most of its value. This will make it hard to motivate and retain employees.

Those who can are likely to move abroad. In a red hot market for engineers, finding a new position should be easy for them.

In all, Yandex is losing key markets, dealing with staff panic, and facing imminent insolvency. Absent help from the Kremlin, it’s hard to see how this company survives.

Yandex’s woes spell trouble for Russia as a whole.

The nation is heavily dependent on resource extraction. Companies like Yandex represented a chance to diversify and join the lucrative tech industry dominated by the West.

But Russia’s authoritarianism is making that transition harder and harder.

Oil prices are high right now, but as the world transitions to renewable energy, Russia may be left with resources the world no longer wants.

And not much else.

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More on tech:

Hedge Funds Pull Back from Tech Amid Big Losses

VADE: The Future of Parking

How China’s Tech Industry Dies

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