How Russia killed its tech industry

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It has now been over a year since the full-scale invasion of Ukraine began, with more than 8,300 recorded civilian deaths and counting. The tech workers who left everything behind to flee Russia warn that the country is well on its way to becoming a village: cut off from the global tech industry, research, funding, scientific exchanges, and critical components. Meanwhile , one of its biggest tech successes, Yandex, has begun fragmenting, selling off lucrative businesses to VKontakte (VK), a competitor controlled by state-owned companies.

“It felt like my country was stolen from me,” says Igor, an executive at VK who has family in Russia and asked that his name be changed so he could talk openly. When the war began, he says, he felt as if 20 years of Russia’s future had been taken away in a heartbeat.

In Russia, technology was one of the few sectors where people felt they could succeed on merit instead of connections. The industry also maintained a spirit of openness: Russian entrepreneurs won international funding and made deals all over the world. Seemed to embrace this openness too, inviting international companies to invest in Russia.

But cracks in Russia’s tech industry started appearing well before the war. For more than a decade, the government has attempted to put Russia’s internet and its most powerful tech companies in a tight grip, threatening an industry that once promised to bring the country into the future. Experts MIT Technology Review spoke with say Russia’s war against Ukraine only accelerated the damage that was already being done, further pushing the country’s biggest tech companies into isolation and chaos and corralling its citizens into its tightly controlled domestic internetwhere news comes from official government 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 at the Barcelona School of Economics and former rector of Russia’s New Economic School. Isolation became a strategic choice, he says.

The tech industry was not Russia’s biggest, but it was one of the main drivers of the economy, says Enikolopov. Between 2015 and 2021, the IT sector in Russia was responsible for more than a third of the growth in the country’s GDP, reaching 3.7 trillion rubles ($47.8 billion) in 2021. Even though that constituted just 3.2% of total GDP, Enikolopov says That as the tech industry falls behind, Russia’s economy will stagnate. “I think this is probably one of the biggest blows to future economic growth in Russia,” he says.

The departures begin

The mood was tense in the red brick and glass-lined Yandex office in south Moscow on February 24, 2022, the day the Russian invasion of Ukraine began. Anastasiia Diuzharden, then head of content marketing at Yandex Business, was there—as were a number of others—but she says she saw few people working. The building’s smoking area had five times more people than usual. Some employees left the country that same day.

As the news of the invasion circulated around the office, Diuzharden and her colleagues were called into a “khural,” a weekly meeting. There, she says, Tigran Khudaverdyan, Yandex’s executive director and deputy CEO, reassured them that the company would continue working.

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