Google's Russian Competition

Search and Destroy

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Searching for success: Yandex executives celebrated the company's listing on the Nasdaq stock exchange in 2011.
  • Why it matters

    Why it matters

    Yandex, which specializes in the Russian-speaking market, is gearing up to take on Google in the West.

  • Facts

    Facts

    • Yandex was founded in Moscow in 2000 and now has a 59 percent share of the Russian Internet searches market.
    • It also operates in Ukraine, Kazakhstan, Belarus and Turkey.
    • Google’s Android mobile operating system has an 85 percent market share in Russia.
  • Audio

    Audio

  • Pdf

Yandex, the Russian answer to Google, is the world’s fourth most popular Internet search engine. The company has an almost 60 percent market share in Russia and also operates in Ukraine, Kazakhstan, Belarus and Turkey.

Yandex, which is listed on the Nasdaq stock exchange in New York, has research and development labs in Switzerland and the United States, and, in a sign of its ambitious expansion plans to take on the likes of Google, has recently opened an office in Berlin.

Jane Zavalishina, 37, is head of Yandex’s Big Data projects and is charged with finding new ways for the company to exploit its data processing technologies. Before taking on this role she ran Yandex.Money, the company’s Internet payment service. She studied Educational Psychology at the Lomonosov Moscow State University.

Most Russians don’t search the Internet with Google, but rather with Yandex. What is the basis of your success?

We believe we understand the Russian language better and are, therefore, more precise than Google. Russia is huge: People in Siberia and Moscow use the same words to say different things, for example.

Yandex has a market share of 59 percent in Russia. Google accounts for 32 percent, but is catching up.

Google has rolled out its own browser, Chrome, and the Android mobile operating system in Russia, and the company is expanding its market share in Internet searches. That’s unfair.

Why?

Although we now have our own browser, we can’t develop a mobile operating system of our own like Android. It’s too expensive. So Android dominates 85 percent of the Russian market. Companies selling Android-operated devices are not allowed to replace the preinstalled Google search engine with another. That’s why we are supporting the EU’s competition case against Google. [The European Commission is investigating Google following complaints from almost 20 European companies that the company uses unfair business practices.]

You started the Yandex Data Factory, which is meant to provide more insight into artificial intelligence and big data for business clients in the East and West. What exactly are you planning?

As operators of a search engine, we have put a lot of brainwork into artificial intelligence and machines learning to analyze large amounts of data over the past 15 years. Since the technology is based on mathematics, and not on language or geography, it can be applied worldwide.

We approached companies and said to them, we don’t yet know exactly what we want to offer you, but there aren’t many around the world with such modern technology. Let’s think together about how you can make use of that and start with small experiments.

How do you protect your customers’ data from being accessed by the Russian government?

We work with customers outside of Russia, with European companies, and store their data in computer centers in the European Union. They have no connection with Russia other than using licensed Yandex software. We leased a data processing center in Amsterdam, but only temporarily, since we are building our own data center in Finland that we will open in March or April.

 

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Jane Zavalishina is hoping Yandex can expand beyond former Soviet countries. Source: Dominik Gigler/DLD Conference

 

Will you then start a major marketing offensive in Europe for the Yandex search engine?

We don’t have such a broad expansion strategy. We don’t desperately want to be everywhere. Our expertise is Russia. We just entered Turkey, our first market where users speak no Russian.

When we prove our product works in a place where Google has dominated almost 100 percent of the market, then we’ll think about other markets. The Finnish data center will handle the searches in Turkey along with the Yandex Data Factory’s data.

When will you get started in Germany?

We have a lot of interest in Germany. Many German companies use our websites to advertise their products on the Russian market. Germany generates the largest part of our European sales with advertising customers such as Lufthansa, Sixt and Zalando.

In addition, we have a research and development lab in Berlin, where we are working on our own speech recognition and other technologies.

Will the data center in Finland also serve the customers in Russia?

No. There is a new law in Russia since the beginning of the year. We are not allowed to set up any data centers outside the country that are used to store the data of Russian users.

 

This article first appeared in the business magazine WirtschaftWoche: To contact the author: Thomas.Stoelzel@wiwo.de

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