EU Sanctions Target Arkady Volozh Stages Comeback with New AI Venture

Arkady Volozh, the cofounder of Russian internet giant Yandex, is making a comeback with a new European AI company called Nebius Group, aiming to become a leading provider of AI infrastructure.

Key developments in Volozh’s journey: Volozh, once known as the architect of “Russia’s Google,” faced significant challenges following Russia’s invasion of Ukraine in 2022:

• He was targeted by EU sanctions and forced to step down from Yandex, which was valued at $30 billion at its peak.
• Volozh and his team spent two years negotiating with the Kremlin to sell off parts of Yandex still based in Russia, including the search engine, for a reduced price of $5 billion.
• Out of the deal, Volozh salvaged parts of Yandex that were already based abroad, including four business units focused on AI, which will be rebranded as Nebius Group.

Nebius Group’s focus and ambitions: Volozh’s new venture aims to provide AI developers with access to big tech-style infrastructure without the conflicting interests of US giants building their own models:

• The main part of Nebius’ business will be its cloud division, offering infrastructure for AI model developers.
• The company owns one data center in Finland, with plans to triple capacity this year, and is building several others with hundreds of megawatts capacity each.
• Nebius is also renting space in tens of existing data centers, with a total rented capacity exceeding 100 megawatts.

Replicating the Yandex formula: Volozh plans to apply the same strategy that made Yandex successful to Nebius Group:

• Many of the 1,300 people currently working for Nebius in Europe are former Yandex employees.
• In addition to the AI cloud business, Nebius has units dedicated to self-driving, data labeling, and education tech, mirroring Yandex’s diverse portfolio.

Navigating politics and controversy: Volozh hopes to distance himself from the political entanglements that plagued Yandex:

• He left Russia for Israel in 2014, the same year the country annexed Crimea, and faced criticism from both the Russian government and opposition activists.
• After stepping down as Yandex CEO due to sanctions, Volozh publicly condemned Russia’s invasion of Ukraine in August 2023, stating, “Russia’s invasion of Ukraine is barbaric, and I am categorically against it.”
• The EU lifted sanctions against Volozh in March 2024, following his move to sever ties with Russia.

Looking ahead: As Volozh embarks on this new chapter with Nebius Group, he emphasizes the nonpolitical nature of the venture and expresses hope for even greater success than Yandex:

• “We’re building the basic infrastructure, which is very much nonpolitical, unlike what Yandex turned out to be,” Volozh says.
• He sees Nebius as just another company in his journey, stating, “I hope [it will be] much bigger, better than what was built before.”

Broader implications: Volozh’s comeback with Nebius Group highlights the complex interplay between technology, politics, and global business in an increasingly interconnected world. As AI continues to advance and shape various industries, the success of Nebius will depend not only on its technological capabilities but also on its ability to navigate the political and ethical challenges that may arise. Volozh’s experience with Yandex serves as a cautionary tale, emphasizing the need for tech leaders to strike a delicate balance between innovation and social responsibility in an ever-changing geopolitical landscape.