author | Linfeng
editor | Haiyao
title picture | midjourney
In late February this year, according to Reuters, EU countries have agreed to lift sanctions on yandex founder arkady volozh.
yandex started out as a search engine, and gradually expanded its service products such as email, online advertising, taxi hailing, maps, takeaways, media, etc., forming a huge business territory and was known as the "Russian Google". However, arkady does not agree with this statement. They began to research search technology in 1993, and the search product was released in 1997, a full year earlier than Google.
yandex is one of Russia's largest search engines and Internet companies. It rejected Google's acquisition and faced competition. It once divided "half of the search engine market" with Google in Russia.
Picture source: Wikipedia
yandex was valued at approximately US$30 billion when it was launched, and it has been singing high ever since. Its search engine has entered surrounding countries such as Ukraine, Turkey, and Kazakhstan, and its unmanned delivery has entered the US, UK, and French markets. Drones and unmanned driving have attracted attention in the United States and Israel, but its international expansion has stopped with the Russia-Ukraine conflict in 2022. .
Under the flames of the war, Yandex was under dual pressure from the Russian and Western markets, and inevitably fell into the whirlpool of politics and public opinion. The media on both sides were in conflict, putting "shackles" on Yandex. For example:
Russian media rbk reported: "Officials of different levels in private Talking to Yandex at the meeting, they said it was a good company, strategically important to the country, but the shareholders were 'wrong' - they were Westerners."
On the other hand, the New York Times quoted its former employees as saying. : "Yandex is a perfect company under any circumstances, but it has a problem, it is a Russian company."
Yandex decided to divest all its business in Russia after breaking its arms to survive. On February 5 this year, Yandex n.v, the parent company of Yandex, agreed to sell all its assets in Russia and part of its international business to a consortium led by the Russian management team for approximately US$5.2 billion (475 billion rubles), with cash traded in RMB. Compared with its market value of US$10.2 billion (Moscow Exchange data), Yandex is sold at a "50% discount".
Source: yandex
html On May 17, Yandex announced that it had completed the first phase of divestiture, selling approximately 68% of its assets (including taxi-hailing and search businesses). The next delivery will be in early July.has been in business for 27 years. Yandex, which was born in a "garage", has grown into a leader in the technology industry and has developed into a "Russian little Google". However, its destiny was completely changed by the Russia-Ukraine conflict. It sold off all of its business in Russia—which accounted for 95% of its revenue from January to September 2023—under economic sanctions and political pressure, leaving only four artificial intelligence companies operating outside Russia. However, this ending may not be so bad.
is confronting Google and has developed more than 90 businesses.
The story begins in the late 1980s when arkady volozh co-founded comp tek, which is said to be one of the largest Cisco dealers and network equipment dealers in Russia. Almost at the same time, arkady co-founded arkadia, a research institution specializing in patent applications and dedicated to developing search software. ilya segalovich studies information retrieval here.
were both born into Russian Jewish families. They have known each other since they were 13 years old and work happily together. Soon after, arkadia became part of comp tek. ilya developed applications for search bibles, goods and services, and international patent service classifiers, and the third one was even successfully commercialized.
Source: the guardian
In 2000, comp tek received an investment of US$5.28 million and established an independently operated yandex company. Arkady left comp tek to become the CEO of yandex.
Source: Internet
arkady’s keen business acumen combined with ilya’s technical genius. By 2013, according to comscore statistics, yandex became the world’s fourth largest search engine with a total of 4.84 billion search terms. At this time, Yandex had already rolled out a huge business network and became the most successful Internet company in Russia.
Its development coincided with the emergence of the Russian Internet.Going back 20 years ago, in 1993, when Russia's first Internet domain name registration service (.ru) just started operating, arkady volozh and his old friend ilya segalovich developed a search engine in Moscow that could be used for "Russian-language morphology" "Unstructured information", named yandex, which stands for yet another indexer, meaning "another search engine".
Source: search engine land, 2010 yandex interface
In 1997, the yandex search engine was unveiled at the softool exhibition, and (yandex.ru) was officially launched. They spent $10,000 to purchase three servers with 1GB hard drives to index all the content on the Russian Internet. At this time, Google had not yet been established and had just registered its trademark. After
was established as an independent company in 2000, many Western companies wanted to acquire Yandex, but Arkady was unwilling to give up control. Instead, he chose baring vostok of michael calvey, one of the first foreign investors to enter the Russian private equity market, as the company's first A backer, who invested $5 million to acquire 35.7% of the shares. This year, yandex supported professional information and online information search in parallel, searched for news and product lists, and launched yandex.catalog, yandex.news and many other services. ilya felt that burning money at yandex was like "hell" at that time. Three years after
completed its first round of financing, Yandex’s market value soared 10 times. In 2001, they opened their first office, Yandex’s headquarters across the street from the former home of famous writer Leo Tolstoy.
yandex’s business journey started with a bang. It launched yandex.direct, the first contextual advertising service on the Russian Internet. Moreover, contextual advertising became Yandex’s main business model as soon as the first batch of Russian netizens came online. It is said that they hired people to contact the companies listed in the Yellow Pages to popularize "what is the Internet" and "what is Internet advertising" one by one, and even spent huge sums of money on TV advertisements. Facts have proved that they chose an effective communication media and achieved profitability through advertising less than 2 years after its establishment. At that time, there were 8.8 million Russian Internet users, and the number of daily search queries on yandex exceeded 2 million.
Source: Internet
In addition to advertising, the two important services of yandex shopping website and online payment were far ahead of the Russian Internet environment at that time. In 2002, when the credit card penetration rate in Russia was well below 1%, they developed a system for converting cash into electronic payments and promoted their advertising services for a long time.
Source: grizzly sms
Russian is the moat for their search engines. ilya revealed at seedcamp week: "The idea behind it (yandex) is not just a search engine. Russian words and grammatical structures are very complex. If you ignore this fact, you will lose at least half of the information by using the wrong word form. So, we started from So different from the moment it was launched. “Yandex provides language understanding systems for understanding the Russian language from its research in the early 1990s.
yandex is experiencing rapid growth, driven by the continuous expansion of its business capabilities. They know very well that user behavior, user interaction, and user input are more important than technology. "Users need more than just search." In the first five years, they added email, image search, online payment, e-commerce, maps and other services, turning Yandex into a large website for users to aggregate target applications. They changed their advertising to a bidding ranking and pay-per-click mechanism to obtain higher revenue. In addition, yandex has gone beyond Russia for the first time since 2005 and has established representative offices/offices in countries such as Ukraine, Kazakhstan, Turkey, Switzerland and the United States.
Picture source: yandex China official website
Among them, yandex map is their widely praised application. In the absence of a digital map provider or traffic information provider, Yandex created an Internet map from scratch based on old-style maps. Ilya and the team wrote an application that is suitable for all available and cheap platforms to obtain GPS tracks and convert them into real-time Traffic maps to make them more usable. Unlike Google Maps, although yandex.probki (traffic jam) is only well-known in Russia, its accuracy and real-time traffic characteristics have brought effective user growth.
its strength is beginning to show around the world.In 2003, the first company in the Russian Internet field to pay dividends to shareholders was Yandex. At the end of this year, Google founders Sergei Brin and Larry Page proposed a US$100 million acquisition deal to Yandex when they visited. Microsoft and Yahoo had also negotiated for the acquisition of Yandex.
yandex has been shaken. Google's revenue from advertising revenue reached 960 million US dollars that year. What's more, joining Google will provide you with a more professional technical environment. Yandex has not received the respect it deserves from Google. Arkady's business partner Leonid revealed: "Google views Yandex just like Wal-Mart views the canteen next to the train station." Ilya scratched the back of his head and decided not to sell it, and directly went to war with Google competes for leadership in the Russian market.
Source: LinkedIn
This battle started quickly. In 2006, Google established its first office in Russia. In 2 years, it increased its market share in Russia from 5% to 34%. After Google launched its business in Russia, it directly took away Rambler's market share and squeezed Yandex's market. Google's Russian search algorithm and Russian Google Maps are almost head-on with Yandex.
Therefore, Yandex has focused on updating the search engine in the past few years. The search team has increased from more than 20 people in 2005 to 500 people. Looking for ways to survive in reorganization and change, it has developed a new machine learning method matrixnet to improve search quality. In 2008 It surpassed Google's market share by 10 percentage points. Since then, Yandex has basically established a firm foothold and can capture half of the search market in Russia.
Source: statcounter, yandex market share from 2009 to 2020
According to raam, the number of yandex employees increased from dozens in 2001 to 3,312 in 2011. Within the company, the proportion of programmer employees has gradually dropped to 50%. The company has no dress code for employees, and employees can be called by their first names regardless of rank, creating a free and relaxed atmosphere.
At the same time, Yandex’s advertising revenue has doubled every year. Even under the influence of the financial crisis in 2008, its contextual advertising increased by 14%, with a market share of 78%. In 2007, the average monthly Internet usage in Russia was 26 million people. The following year, the number of monthly active users of Yandex reached 18 million. At this moment, Yandex is gearing up to prepare for an IPO in the United States.
Source: the guardian
In May 2011, yandex was listed on Nasdaq through yandex nv (registered in the Netherlands), raising US$1.3 billion. According to Reuters, this is the industry's largest IPO in the United States since Google went public in 2004. On the day of listing, Yandex’s market value increased by more than 50%, and it was valued at nearly US$30 billion in November of that year.
ilya said: "All our competitors have sufficient funds, and we must always be prepared. The Internet situation changes rapidly, and we may make acquisitions or adjust our strategies." After going public, yandex made the best use of the funds raised. , bought Russia’s largest movie search engine kinopoisk, classified advertising website auto.ru, Israeli geolocation company kitlocate, etc., and developed translation services, taxi hailing, news applications, housework experts, weather analysis and other applications, covering almost all users life services.
Picture source: The network
yandex has more than 90 businesses, and its business territory is infinitely extended. “You can think of Yandex as Baidu + Didi + Taobao + Meituan,” someone commented.
But unfortunately, ilya passed away from brain cancer in 2013. A year before his death, Yandex also released a browser designed by himself to implement personalized search. ilya is the soul of yandex, and he personally introduced many technical talents to the company. It is described that he does not have an office himself and works in an open area of the company. ilya has been personally managing dozens of projects, which means that his death may have an impact on Yandex’s technical operations, product pipeline and company culture.
lost its reliable business partner. In 2014, arkady handed over the business to financial manager Alexander Shulgin and moved to Israel. He had sold face.com, a technology company here, to Facebook for US$100 million. The combination of
's technical master and business acumen ended, and the stability of yandex also left with it.
In the two years from then to 2016, Yandex had a difficult time, and its stock price almost fell below the issue price under dual political and economic pressures.Looking at the international situation, the Crimean crisis broke out in 2014, which affected Ukraine's overseas business, which had been developing for 10 years. Sanctions from the United States and the European Union affected external financing. The plunge in international crude oil prices directly hit Russia's finances, and the ruble plummeted. Moreover, the advertising business, which accounted for 97% of Yandex's revenue, slowed down in 2015, and Yandex's net profit in 2016 dropped by 30% compared to the 2015 fiscal year.
Source: yandex’s 2016 financial report
In the prospectus, yandex once listed “the negative impact of the political situation” among the risk factors. In 2009, Yandex's "golden shares" were sold to state-owned bank Sberbank for 1 euro, and then-Russian President Dmitry declared them an asset of national importance.
Source: yandex "Securities Prospectus of Foreign Issuers", highlighted sentence translation: Negative changes in the political situation.
supervision and protection go hand in hand. After 2017, the Russian Federal Monopoly Service (fas) stopped Google's monopoly behavior. Yandex regained some of the Android system's share, and Yandex overtook Google. On the other hand, in August 2019, according to Reuters, Anton Gorelkin proposed a bill to limit foreign ownership of "important" technology companies in Russia to 20%. Yandex negotiated with the government to reach an agreement to repeal this legislation. Russia The control over Yandex is further strengthened - the solution is to transfer the "golden shares" to a government-approved public interest foundation with the power to block transactions exceeding 10% of Yandex, nominate 2 directors to the meeting, and have the power to veto any impact on national security The problem.
Previously, Putin visited Yandex headquarters in September 2017 and had a simple communication with the voice assistant Alice (similar to Apple’s Siri). Raam commented in conjunction with the current situation: “Putin’s visit shows that this field (Russian Internet) is no longer the same. There is controversy.”
Source: Internet
Since then, Yandex’s development has returned to the right track and entered the travel field. As early as 2011, the yandex.taxi application was already in operation. It fought with Uber, which later broke into the Russian market, for three years. According to analysis, the two parties finally made peace after many money-burning battles.
Source: The official website of
shows that in 2017, Yandex and Uber agreed to merge Yandex’s taxi-hailing business in Armenia and Georgia, and Uber’s taxi-hailing and food-delivery business in Belarus, Azerbaijan, and Kazakhstan. Uber invested US$225 million and Yandex invested US$100 million to establish a new company with a valuation of US$3.725 billion. The two brands continued to operate, with monthly order volume increasing fourfold from the previous year and expanding to approximately 20 countries.
has also started autonomous driving since 2016. After obtaining self-driving car licenses in Israel and Nevada in the United States in 2018, Yandex's self-driving cars have hit the road from the laboratory, and they have publicly tested self-driving taxi ride-sharing services in Innopolis and Skolkovo. At the CES show in Las Vegas the following year, Yandex demonstrated their first self-driving car. The Toyota Prius V was equipped with a safety driver and completed operations such as lane changes and left turns on the road. The silky smooth effect caused Awe.
Picture source: medium, yandex displays self-driving cars
For a time, yandex's international expansion of unmanned delivery has gradually begun. By the end of 2020, it has more than 12,000 employees, with more than 30 offices and 9 global offices around the world. After arriving in Israel, arkady continued to run the technology company and was also looking for new products.
Source: wiki, the oldest yandex office in Moscow. In 2006,
yandex expanded express delivery and e-commerce services in the international market. After acquiring the Israeli scooter company Wind, Yandex launched Yandex Deli to provide 15-minute online delivery services in the UK and France, and 50 Yandex experimental robots were used for campus delivery at Ohio State University.
Source: medium, yandex campus distribution
They also invested US$30 million to establish a cloud computing business in Germany and registered an Irish company to carry out search engine, taxi and e-commerce businesses. According to another financial report, yandex.market (e-commerce)’s GMV will accelerate month-on-month every month in 2021.
The Russian giant
under the flames of war continues to acquire, expand, and grow. Yandex, which has been developed for 25 years, has become Russia's Internet giant and is known as the "Russian high-tech economic vane in the 21st century." And such a giant is in the conflict between Russia and Ukraine After the outbreak, its destiny was once again in turmoil, and international expansion was even further out of reach.
On February 24, 2022, Russia launched a special military operation against Ukraine. Yandex, the Russian technology giant in the midst of the war, faces the same dilemma as all Russian technology companies: survival.
yandex has a huge business. Even though it is an independent listed company, it can no longer stay alone and has to be involved in the political whirlpool.
On the day of the conflict, Yandex’s second-in-command tigran khudaverdyan and the heads of major companies in Russia participated in the Kremlin meeting. The following month, he resigned as executive director and deputy chief administrative officer of the company after being sanctioned by the European Union for "spreading false information."
In the same month, two Americans, Esther Dyson and Ilya Strebulaev, also announced their departure from the board of directors.
yandex's stock price plummeted, and its market value dropped from its peak of $30 billion to $6.8 billion. Starting from February 28, Nasdaq suspended trading in Russian stocks.
In June of the same year, Arkady in Israel was also sanctioned. The European Union accused Arkady of "materially or financially supporting Russia's invasion." Arkady resigned that day and had previously assured employees that the company had prepared emergency funds for them.
That year, arkady's personal worth shrank from US$2.6 billion in December 2020 to US$580 million. After the funds were frozen, a group illegally occupied his Amsterdam villa and did not leave until his sanctions were lifted. After
arkady left Russia, he began to split his business. Yandex was split into two parts, one responsible for managing the business in Russia, and a company headquartered in the Netherlands focusing on new technologies in the international market. In August 2023, arkady issued a statement saying: "Russia's invasion of Ukraine is a barbaric act, and I firmly oppose it."
Almost overnight, dozens of technology companies and Western investors all evacuated. Former partners and foreign competitors are disconnecting from Russia. How big the business of
yandex is, the scope of its involvement is wide. Three Uber executives working at yandex.taxi resigned, and Lithuania removed yandex.taxi. Yandex has closed delivery services in Paris and Columbus, as well as the fast delivery market in London, which performed well. American food delivery company Grubhub has terminated its Yandex robot delivery program. duckduckgo’s sites in Russia and Türkiye cut ties with Yandex.
According to Bloomberg, the United States has imposed sanctions on Russia. Due to import restrictions, Yandex will run out of semiconductors used in servers within 12-18 months. Businesses such as cloud computing, search engines, streaming media, and online stores will all be affected, including for The self-driving car sector has been hardest hit.
Not only that, stock trading was frozen due to sanctions, shareholders sought bond guarantees for repayment, and Yandex was unable to pay the high amount of 1.25 billion.
A few months later, Russia experienced a large outflow of IT workers. According to estimates from the Russian Electronic Commerce Association, about 50,000 to 70,000 IT experts left Russia in the first wave of immigration after the conflict. According to Bloomberg, in the same year, more than 10% of Yandex’s 19,000 employees left Russia. In addition, more than 1,000 foreign companies have reduced their operations in Russia.
In China, Yandex’s information dissemination faces a dilemma. The New York Times showed that after the conflict between Russia and Ukraine broke out, the Russian government made it a crime to spread false news about the military. The maximum penalty is 15 years in prison and a hefty fine. On the one hand, yandex has to satisfy the government to control the smear and opposition to the implementation of special military operations. On the other hand, it is the main information source service provider for Russians. In the weeks of the Russia-Ukraine conflict, yandex news had an average daily audience of about 1,400 Thousands of people visited.
Sandwiched in the middle, yandex made a decision to survive with a broken arm and began to give away lucrative projects.“The team can no longer provide the public with a free and open information platform.” In mid-March 2022, yandex announced the sale of the news business yandex news and the entertainment channel yandex zen, and instead focused on the development of taxi services, e-commerce, and autonomous driving projects. In August, Yandex sold its news and content business to rival VK (Russia's "Tencent"), and in return, it acquired VK's food delivery service.
In November of that year, news continued to spread that Yandex was moving its most promising new technologies overseas and giving up most of its Russian businesses (search engines, ride-hailing services and e-commerce) and selling them to local buyers.
arkady decided to sell but retain the rights to develop Yandex's promising international projects, such as cloud computing and autonomous driving. Fortune commented: "This plan requires Russia's permission before Yandex can transfer technology abroad, and it requires the consent of Yandex shareholders."
Yandex had to discuss the company's future with the Russian government again. It is said that the plan had the support of former Russian Finance Minister Aleksei Kudrin at the time. Later, he kept his word and resigned from public office at the end of November 2022 to serve as a senior executive of the fragmented Yandex. Most of Yandex's mature businesses will be controlled by a company newly registered in Russia. This company will be personally managed by Aleksei Kudrin. Aleksei is not a simple character. The Bell commented on him: "If Russia fails in the war and Putin looks for a successor who can negotiate with the West, he will definitely appear on the candidate list."
After 18 months of long negotiations, yandex issued an announcement , decided to sell the Russian business, handing the majority of the business (about 95% of revenue) to a consortium composed of a senior administrator and 4 investors for a consideration of at least 50% of 475 billion rubles ($5.2 billion), 35% is allocated to the management fund composed of the Russian executive team, and the others are the founders of leta capital funds, CEOs of Lukoil subsidiaries, infinitum, and former Gazprom executives. With the exception of Lukoil, what they all have in common is that they have not been affected by sanctions.
Source: yandex official website
The announcement mentioned that the reason for the consideration transaction is that its parent company is located in the Netherlands, a country regarded as "unfriendly" by the Russian government, so there is a mandatory discount of 50% of the "fair value". Additionally, the transaction will be conducted in two phases. On May 17, 2024, Yandex announced that it had successfully completed the preliminary separation of its Russian business and had sold approximately 68% of its assets, including search engines and ride-hailing applications. The next delivery will take place in early July. After the delivery is completed, Yandex nv will no longer have interests in the Russian business.
According to reports, Yandex’s new parent company, mkao Yandex, has just completed registration and is a private independent company, and its shares will be traded on the Moscow Stock Exchange. After more than ten years, the Russian government has still "state-owned" Yandex. Compared with the majority of Western investors who participated in the listing in 2011, Yandex is now fully controlled by Russian entities for the first time.
Starting from May 2024, entering "yandex.ru" in the browser will automatically be directed to vk's dzen.ru, and yandex itself has been migrated to the new domain name ya.ru.
Source: The display result of yandex.ru entered into the browser
is not just yandex. Since the Russia-Ukraine conflict, there has been a wave of mergers and acquisitions in Russia. Foreign companies have withdrawn from the market and sold assets to Russian competitors at low prices, including Classified advertising website avito, naspers subsidiary. In fact, technology companies such as Yandex benefited from the exit of competitors, with better-than-expected economic revenue in 2022, and it also put aside political and legal pressure through its exit.
best ending
yandex's exit is the largest corporate exit deal and business divestiture since the Russia-Ukraine conflict. This is indeed a tragic story, but it is not necessarily a bad outcome.
Although Russia has been cut off by the West from access to the global financial system, and its economic ties with Europe have also been quickly severed, the Russian economy will rise instead of falling in 2023. According to Soochow Strategy data, Russia has maintained a year-on-year GDP growth rate of around 4.6% in the past year.
benefited from the growth of the general environment and the withdrawal of overseas brands. The buyer took over Yandex's diversified Internet business and increased its use.The monthly active volume of core businesses such as yandex market, yandex go, and yandex maps has reached tens of millions. Among them, market e-commerce orders will increase by 100% year-on-year in Q3 2023.
Image source: Internet
base point data. The taxi software yandex go and the map software yandex maps are highly used in Kazakhstan and Uzbekistan, which have a Russian language base. They continue to rank first in the application tourism (free) list. In addition, according to IT House, Yandex ads advertising business has attracted many Chinese application publishers and advertisers in the past two years.
Picture source: Diandian Data, Uzbekistan’s yandex go application ranking from May to June
Picture source: Diandian Data, Kazakhstan’s yandex go application ranking from May to June
aleksei’s appointment means that the Russian government attaches great importance to yandex, and also for it Later, the continuous development of the business brought possibilities. For example, they also launched neuro in April this year, an AI product that integrates its own search engine and LLM, and is embedded in Yandex for use, which is similar to adding AI aggregation capabilities to a search engine.
Picture source: yandex browser, the pink slider below the search box is the neuro open key
On the other side, after "selling out", yandex nv stated in the announcement that after selling the Russian business, it will retain AI cloud computing, autonomous driving developers, etc. Four of the most promising early-stage tech companies. Nebius AI (AI cloud platform, formerly Yandex Cloud), Toloka AI (Genai data solution), Avride (autonomous vehicle), and Tripleten (educational technology services, formerly Yandex Prakticum) left behind by Arkady are targeting Europe, the United States, Asian and Middle Eastern markets.
In March this year, the European Union lifted arkady's sanctions, and he was free to start his own business again without the pressure of strong government supervision.
Before the Russia-Ukraine conflict, yandex had already shown its emphasis on autonomous driving, which was the focus of arkady overseas. Since its development in 2017, Yandex has tested autonomous driving technology in Russia, Israel, and the United States. Yandex has also appeared on the list of competitors of the autonomous driving market research organization Navigant Research in 2020. The same category includes Daimler (in cooperation with Bosch), Hyundai (in cooperation with aptiv), Toyota, Volkswagen, etc. Since arkady moved to Israel,
has set up a center to trial run yango taxis, deli food delivery and autonomous driving. Israeli media said that after the Russia-Ukraine conflict and faced with sanctions from Western media, Israel is expected to become a "refuge" for some young Russian employees of Yandex. The
announcement shows that yandex nv will retain the core intellectual property assets, namely the proprietary technology of the 1,300 employees employed by yandex nv and international business, and obtain a transition license in 2024 to ensure business development. After completing the transition period, yandex will stop using Brand and change legal name. It was reported in March that Yandex’s Toloka AI was helping train facial recognition software for use in Russia.
This means that arkady will have the opportunity and sufficient technical staff to continue research before completely breaking away from the brand. However, there are risks. Yandex’s self-driving business has not been clearly profitable before. After it is separated from the profitable taxi and advertising business, its development will be unknown.
Picture source: yandex’s 2023 Q4 financial report
has media comments. For yandex, this may be the best ending. In 2022, Yandex, which is listed on the US stock market, stands in front of sanctions from Western capital markets, like a microcosm of Russia. After it completes the complete sale of its Russian business next month, Internet veteran Arkady, who has a net worth of US$1.5 billion, will start again.
