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What is Yandex, Russia’s ‘everything’ company?

By Alma Fabiani

Oct 2, 2020

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What is Yandex?

Yandex N.V. is a Russian multinational internet company best known for its search engine also called Yandex. While it was originally started in Russian at yandex.ru, it now has a global English version at yandex.com.

But Yandex is more than Russia’s biggest search engine. It is the biggest technology company in Russia, period. Yandex offers many other types of products and services, from music streaming and e-commerce to smart home technology and self-driving cars. Think Google mixed with Amazon, Uber and Spotify and you’re getting close to the empire that is Yandex.

Yandex was founded in 1997 by Arkady Volozh (who is the current CEO of the company), Arkady Borkovsky and Ilya Segalovich. The name is derived from the phrase “Yet Another iNDEXer.” Yandex’s search engine is similar to other popular search engines in most ways. It returns a list of blue links and also offers search results with images, videos and top news. In a 2019 interview with the Search Engine Journal, the Yandex search team shared that voice search accounts for about 20 per cent of searches.

To put things into perspective, in Russia, Yandex is more popular than Google. But being the crown jewel of Russia’s silicon valley also has its drawbacks. The country’s government sees the internet as contested territory amid ever-present tensions with the US.

Yandex and the Moscow Kremlin

According to Moscow-based journalist Evan Gershkovich who spoke with the MIT Technology Reviews in a podcast, the Russian government wants influence over how Yandex uses its massive trove of data on Russian citizens. Foreign investors, meanwhile, are more interested in how that data can be turned into growth and profit. Gershkovich explains how “Yandex’s ability to walk a highwire between the Kremlin and Wall Street could potentially serve as a kind of template for Big Tech.”

Imagine having one and only one tech company serving you everything you need during the day. “Everything from your morning news, music, and groceries, to your taxi home at night all delivered and operated by a single mega-corporation. Well, head over to Russia and you’ll find that world is very much a reality,” says Gershkovich.

According to him, Yandex even got an extra boost from the coronavirus pandemic. Revenue for the company’s delivery apps grew by 42 per cent in the second quarter of 2020. But this kind of success doesn’t come for free. Because the company is constantly growing, many foreigners are showing interest in Yandex and the Russian government is not happy about it. For them, only the government should have ultimate control of the massive amounts of data that tech companies hold on Russian citizens.

As a result, Yandex gets caught in between the demands of the foreign investors who hold most of its stock and those of the Kremlin. For years, the Kremlin and other state security services didn’t pay attention to the internet. Then, in 2008, when Russia fought a five day war with Georgia, Yandex News (which works the same way as Google News) started picking up liberal and independent media news about the war and putting it in its feed. This really upset the Kremlin, which wanted its viewpoint to be highlighted.

“The Kremlin realised what power the internet actually could have. So it started to realise that this was an arena that it would if not control, at least pay close attention to,” says Gershkovich. First, Yandex faced a potential takeover by Kremlin-linked oligarch Alisher Usmanov. A year later in 2009, Yandex handed Russia’s largest lender, the state-owned Sberbank a so-called “golden share,” which allowed the bank to veto transactions involving more than a quarter of Yandex’s stock. This was meant to satisfy the Kremlin with any transactions the authorities weren’t happy with.

But when rumours surfaced that Sberbank was now hoping to buy a 30 per cent stake in Yandex to protect it from so-called “potential trouble,” in New York, the company lost a billion dollars in market value over these worries. It then took Yandex about a year but the company changed that golden-share into what they called the Public Interest Foundation, which has 11 seats on its board.

Three belong to Yandex, and the other eight are divided up among influential business groups and state-affiliated universities. This new structure now has that veto power that used to be with Sberbank. “The Public Interest Foundation has three main functions. The first is to block deals that would concentrate more than 10 per cent of Yandex’s stock under a single owner. The second is to control operations involving intellectual property. And third is the control of personal data,” explains Gershkovich.

In recent years, Russia passed two key laws which affected internet companies. The first one requires them to store data on servers in Russia only. And the second law is this notorious, so-called ‘Sovereign Internet Law’, which means that a state-owned communications infrastructure would be created and would allow the country to cut itself off from the global internet.

From the Kremlin’s perspective, the Sovereign Internet Law would be a way to control what its citizens can see online, just like in China. The only difference between the two countries is that, while China has complete control over its tech platforms, Russia is still playing around with the idea of doing so.

Yandex might become an example for Facebook

When Russia tried to block the popular messenger app Telegram, it stated for about a year that it was blocked. All the while, authorities kept using it themselves, including state media channels and even the Kremlin spokesman Dmitri Peskov. A year and a half later, the government just announced that Telegram was no longer blocked.

“It remains to be seen whether this is something that Russia is actually able to pull off. And so while it may want to be China in this sort of way, it sometimes falls short,” adds Gershkovich. This whole new way of moderating big tech companies is something that Facebook has also been pressured for.

In response to that, Facebook created this so-called ‘oversight board’, which is similar to how Yandex’s Public Interest Foundation has universities and big companies that are also part of it. Facebook’s oversight board has legal and human rights luminaries who are able to review and overturn some of the platform’s decisions. Yandex may foretell not only the sorts of demands that a company like Google and Facebook could face going forward, but also the solutions that they might come up with to retain some sort of independence in the way that Yandex has here in Russia.