(Bloomberg) — European Union sanctions on the founder and former head of Russia’s most popular Internet search engine show how an increasing number of Russian businessmen are facing measures that aim to punish the Kremlin for the invasion of Ukraine.
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Arkady Volozh promptly resigned from the board and as chief executive officer of Yandex NV after being sanctioned on Friday by the bloc, which said the company omitted content critical of the Russian government from its search results.
The EU said Volozh backed the Kremlin and “is responsible for supporting actions or policies which undermine or threaten the territorial integrity, sovereignty and independence of Ukraine.”
Volozh, 58, is a rare example of a Russian businessman who built a company with international ambitions that isn’t tied to natural resources or state structures. He started in business importing computers in the 1980s and created Yandex, which stands for “yet another indexer,” with his high school friend Ilya Segalovich.
It controls over 60% of the Russian search engine market and has grown to offer ride hailing, online shopping and self-driving services around the world. Once dubbed the “Google of Russia,” its 2011 initial public offering in New York was the year’s biggest technology IPO.
But the company in recent years found it increasingly difficult to navigate between the Kremlin’s tightening grip on internet resources and western investors. In 2019, the government forced it to change its corporate-governance structure and give a golden share to an outside group in a move Volozh said at the time would “protect the interests of the country.”
The tensions burst to the forefront after the invasion of Ukraine, when the company’s US-traded shares were frozen, sanctions on technology imports threatened its ability to purchase hardware needed to power its products, and the Kremlin introduced harsher internet censorship.
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After the 2019 restructuring, Volozh moved his shares to a family trust, which now controls 45.5% of voting power and an 8.6% economic interest in the company. He currently lives in Israel.
“While I consider this decision to be misguided and ultimately counterproductive, I do not intend to give any instructions to my family trust as long as sanctions are in place,” Volozh said in a statement after the EU’s measures were announced.
The tycoon “isn’t a controlling shareholder of Yandex, and consequently these sanctions do not apply to Yandex NV or its subsidiaries,” according to the company.
He was hit by sanctions after the EU in March targeted Yandex’s Deputy Chief Executive Officer Tigran Khudaverdyan.
Yandex shares were down 5.8% to 1,410.60 rubles ($22.94) at 3:35 p.m. in Moscow, following a 6% slump on Friday. The stock is down 69% this year.
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