Russia Increases Internet Access As Yandex Sells Assets To State-owned VK | Panda Anku

  • Russian tech giants Yandex and VK agree to swap some assets
  • Yandex sells newsfeed, homepage to state-controlled VK
  • In return, Yandex will get the grocery delivery service Delivery Club
  • This content was produced in Russia, where the law restricts coverage of Russian military operations in Ukraine

MOSCOW, Aug 23 (Reuters) – The Russian government tightened its control over the internet on Tuesday when a state-controlled company with close ties to President Vladimir Putin agreed to buy the news feed and homepage of the country’s most popular website.

Yandex (YNDX.O), often referred to as Russia’s Google, said it is selling its news aggregator, content platform Zen and homepage yandex.ru to VK to focus on other businesses such as grocery delivery and ride-hailing.

In return, Yandex will acquire the food delivery company Delivery Club from VK. Values ​​for the assets were not disclosed.

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VK operates Russia’s largest social network, VKontakte, and over the past year state-controlled gas exporter Gazprom and banker Yuri Kovalchuk, whom Putin has publicly described as a personal friend, have taken greater control of the company.

The CEO is Vladimir Kiriyenko, the son of Putin’s first deputy chief of staff, Sergei Kiriyenko.

Russia’s years of suppression of independent media intensified after Moscow deployed troops to Ukraine on February 24. It passed legislation banning “false information” about the armed forces and cutting off the ability of many organizations to broadcast freely.

It has blocked access to some foreign platforms, including Meta Platforms (META.O) Facebook and Instagram.

“Yandex’s board and management have concluded that the interests of the company’s stakeholders … are best served by strategically exiting its media businesses and focusing on other technologies and services,” Yandex said in one Explanation.

Like many Russian companies, Yandex has had a turbulent few months. It plunged into a first-quarter loss and its shares fell to six-year lows before suspending trading in late February. Revenue and earnings rebounded in the second quarter, and while Nasdaq-listed shares remain suspended, trading in Moscow shares resumed after about a month. Continue reading

“BUY OUR FREEDOM”

Yandex has complied in recent years, under threat of fines, with Moscow’s requests for reports from publications to appear in its news aggregator, drawing criticism from free speech advocates.

Moscow has not blocked access to most foreign-language media, which remain freely available in Russia and on Yandex, but the search results restrict access to all sites that communications regulator Roskomnadzor has banned, many of which are independent Russian-language media.

In February, Yandex began warning Russian users looking for information about events in Ukraine about unreliable information on the Internet. Continue reading

A former Yandex News head, Lev Gershenzon, on March 1 described Yandex as a key element in hiding information about the conflict in Ukraine. Yandex has denied participating in the censorship.

“We’re buying our freedom,” a source close to Yandex said. “This deal was such a burden on our feet.

“By doing so, we can make our business significantly depoliticized, practically completely depoliticized.”

ONLINE SEARCH

According to its analysis tool Yandex Radar, Yandex dominates the Russian online search market with a share of around 62%. Google accounts for about 36%, VK’s mail.ru less than 1%.

This stronghold in the online search market is likely to continue.

Yandex.ru shows a bunch of messages under its search bar, followed by a continuous stream of content. The company’s entry point for search will now be ya.ru, a site similar to Google’s homepage and already popular with those who prefer uncluttered searches.

Yandex.ru, its newsfeed and Zen will be rebranded as dzen.ru, Yandex said, with VK taking over development and control over “content, look and feel.” Continue reading

The asset swaps are subject to anti-monopoly approval and are expected to be finalized in the coming months, Yandex said.

E-COMMERCE REVIEW

Search, advertising, and ride-hailing are among Yandex’s top-grossing businesses, but there are several other areas like cloud services and self-driving cars. It is expanding its services in Africa and Latin America, but is withdrawing from e-grocery trading in Europe. Continue reading

The terms of the deal look largely neutral, BCS Express said in a note. Profitable Zen and News businesses are positive for VK, while Yandex is strengthening its position in foodtech with likely loss-making Delivery Club, analysts said.

Moscow-listed shares of Yandex rose 2.7%, while VK depository receipts rose 2.9%, both outperforming the broader market.

Dmitry Masyuk, head of Yandex’s Foodtech division, said Delivery Club will improve the speed and choice of its food delivery offering. Yandex estimated the size of the market at 650 billion rubles ($11 billion) by 2021 and sees it growing at 20% annually, he said.

($1 = 59.7500 rubles)

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Reporting by Alexander Marrow Editing by Jason Neely and Mark Potter

Our standards: The Thomson Reuters Trust Principles.

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