Yandex disruptions expose Russia internet centralisation risks after Ukraine strikes

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Yandex disruptions reveal risks

Highlights

Ukrainian attacks over the past week severely damaged three of Yandex’s six data centres, causing widespread disruptions to email, payments, and digital services in Russia and neighbours.
Two Yandex data centres are fully offline and a third is partially damaged, with repairs expected to take several months and ongoing slowdowns anticipated.
Service outages, especially acute in Kazakhstan where Yandex holds over 90 per cent urban market share, have prompted Russia’s digital ministry to pledge protection for key digital infrastructure.

Service outages spread across Russia and neighbours

As first reported by the Financial Times, Ukrainian attacks over the past week have severely damaged three of Yandex’s six data centres, disrupting email, taxi bookings, payment tools, websites and other digital services relied on by businesses and consumers across Russia.

Users have struggled to access Yandex email accounts, open work files and book taxis, while some cities have lost bus timetable displays. In Moscow, some residents are unable to open shared courtyard gates because the entry systems depend on a single provider using Yandex infrastructure.

Problems have also hit Yandex Pay, which expanded after Apple Pay left Russia, with some users seeing balances disappear temporarily. Yandex says the money is safe, while hundreds of websites continue to work intermittently, including dating app Twinby and restaurant chain Vkusno i tochka.

The fallout extends beyond Russia, with outages reported in Kazakhstan, Uzbekistan and Belarus. The disruption is especially acute in Kazakhstan, where Yandex holds more than 90 per cent of the market in the two biggest cities.

Kremlin strategy leaves concentrated infrastructure exposed

Damage to Yandex’s network is affecting thousands of unrelated companies because so much of Russia’s technology ecosystem depends on the group’s infrastructure. Two of the company’s six data centres are shut down completely, while a third has several modules knocked out.

Yandex has not said how long repairs will take. A person close to management says the company hopes to restore overall functionality quickly, though services may run more slowly than usual, while a return to full capacity is expected to take several months.

Kyiv says the attacks are retaliation for Russian strikes on Ukrainian data centres, but the domestic impact in Russia is exposing the downside of a policy pursued for more than a decade to build a so-called sovereign internet. That effort promoted domestic platforms over Western rivals and required Russian companies to store personal data inside the country, helping turn Yandex into a central hub before its 2024 sale to investors tied to President Vladimir Putin.

The scale of the disruption has also drawn an official response. Russia’s digital ministry says authorities will protect such facilities, despite Putin’s recent position that businesses should take responsibility for anti-drone defences rather than seek state support.

In our earlier article on the recent pullback in AI-related stocks, we explained how investors are increasingly separating companies that finance large-scale AI infrastructure from platforms that monetize AI through existing products and cash flow. The piece highlighted how revised expectations around OpenAI’s revenue intensified concerns that heavily leveraged data center expansion may take longer to pay off, putting pressure on infrastructure builders and some chip suppliers while stronger platforms held up better.

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