Equity Method Investments

12 Months Ended

Dec. 31, 2020

Equity Method Investments and Joint Ventures [Abstract]

Note 4 - Equity Method Investments

The carrying value of our equity method investments as of December 31, 2019 and 2020 were as follows (in millions):


	As of December 31,
	2019		2020
MLU B.V. (1)	$	1,224	$	1,001
Mission Bay 3 & 4 (2)	140		41
Other	—		37
Equity method investments	$	1,364	$	1,079

(1) Refer to Note 19 - Divestitures for further information.

(2) Refer to Note 16 - Variable Interest Entities ("VIEs") for further information.

MLU B.V. and Uber Russia/CIS Operations

During 2018, we closed a transaction that contributed the net assets of our Uber Russia/CIS operations into a newly formed private limited liability company (“MLU B.V.” or “Yandex.Taxi joint venture”), with Yandex and us holding ownership interests in

MLU B.V. In exchange for consideration contributed, we received a seat on MLU B.V.’s board and an initial 38% equity ownership interest consisting of common stock in MLU B.V. Certain contingent equity issuances of MLU B.V. may dilute our equity ownership interest to approximately 33%. The investment was determined to be an equity method investment due to our ability to exercise significant influence over MLU B.V. The initial fair value of our equity method investment in MLU B.V. was estimated using discounted cash flows of MLU B.V. The equity ownership interest in MLU B.V. was 38% and 35% as of December 31, 2019 and 2020, respectively.

During 2020, Yandex contributed its Yandex.Carsharing business (“Drive”) into MLU B.V. in exchange for an additional equity interest. The contribution of Drive into MLU B.V. resulted in the dilution of our ownership in MLU B.V. from 38% to 35%. The gain recognized on the dilution of our interest was not material to our consolidated results of operations during 2020. As part of this transaction, MLU B.V. contributed the assets and liabilities of its autonomous driving unit into a new legal entity, Yandex Self Driving Group B.V. (“SDG”), in which Yandex contributed additional capital. The reduction of our ownership interest to 20% in SDG, initially valued at $42 million, did not result in a material dilution gain.

Included in the carrying value of MLU B.V. is the basis difference, net of amortization, between the original cost of the investment and our proportionate share of the net assets of MLU B.V. The carrying value of the equity method investment is primarily adjusted for our share in the income or losses of MLU B.V. and amortization of basis differences. Equity method goodwill and intangible assets, net of accumulated amortization are also adjusted for currency translation adjustments representing fluctuations between the functional currency of the investee, the Ruble and the U.S. Dollar.

The table below provides the composition of the basis difference as of December 31, 2020 (in millions):


	As of December 31, 2020
Equity method goodwill	$	806
Intangible assets, net of accumulated amortization	87
Deferred tax liabilities	(19)
Cumulative currency translation adjustments	(216)
Basis difference	$	658

We amortize the basis difference related to the intangible assets over the estimated useful lives of the assets that gave rise to the difference using the straight-line method. The weighted-average life of the intangible assets is approximately 4.8 years and 4.0 years as of December 31, 2019 and 2020, respectively. Equity method goodwill is not amortized. The investment balance is reviewed for impairment whenever factors indicate that the carrying value of the equity method investment may not be recoverable. As of December 31, 2019 and 2020, we determined that there was no impairment of our investment in MLU B.V. The future effect of the COVID-19 pandemic and related government actions as well as other factors will continue to be monitored.

Mission Bay 3 & 4

The Mission Bay 3 & 4 JV refers to Event Center Office Partners, LLC (“ECOP”), a joint venture entity established in 2018, by Uber and two companies (“LLC Partners”) to manage the construction and operation of two office buildings owned by two ECOP wholly-owned subsidiaries. We contributed $136 million cash in exchange for a 45% interest in ECOP. The two LLC Partners own 45% and 10%, respectively. The equity method investment for Mission Bay 3 & 4 was $138 million and $41 million as of December 31, 2019 and 2020, respectively. The equity ownership interest in ECOP was 45% as of December 31, 2019 and 2020.

In March 2020, the two ECOP wholly-owned subsidiaries took out new loans. Upon closing of the new financing, the proceeds were used to first pay off the existing construction loan, then to cover the required operation reserve as well as various financing costs, and last, the remaining proceeds were distributed back to Uber and the LLC Partners based on their ownership percentage. As a result, Uber received $91 million from the ECOP as a return of capital investment, and reduced the investment carrying value by the same amount.

We have significant influence over ECOP and we account for our investment in ECOP under the equity method. At each reporting period and a quarter in arrears, we adjust the carrying value of our investment to reflect our proportionate share of ECOP’s income or loss, and any impairments, with a corresponding credit or debit, respectively, to income or loss from equity method investment, net of tax in the consolidated statements of operations. In 2018, no equity earnings were recognized since the sole activity of the ECOP consisted of construction of the assets and costs incurred were capitalized. During 2019, the construction was completed and leasing activities commenced, and, in 2019 and 2020 immaterial amounts of equity earnings were recognized. During 2020, we incurred an immaterial amount of lease payments with ECOP, which is a related party. As of December 31, 2019 and 2020, we determined that there was no impairment of our investment in ECOP.