Kremlin's Influence On Yandex During Lockdown Could Threaten Its Existence

If there’s any doubt of the Kremlin's dominance over companies that are doing business in Russia, take another look at Yandex. The Russian search company, most often compared to Google, is looking to reinvent some services to survive, but the process appears to be challenging.

In the midst of the COVID-19 pandemic, Yandex began to transition some of its services to adapt. The company rebuilt its taxi driver service to deliver groceries and food, as well as packages from Beru, the ecommerce joint venture with state-run Sberbank.

It also opened "disinfection points" for taxis where drivers can access masks and hand sanitizer, and spent about $3.4 million on a project to deliver COVID-19 tests and drive doctors to in-home visits in 24 cities.

Yandex has been attempting to set up delivery services after revenue from its core online advertising business fell in April, year-over-year, similar to Google and Microsoft Advertising.

Gross merchandise volume for its taxi joint venture with Uber -- which owns 37% of Yandex Taxi -- fell 60% in Moscow year-on-year in April, down 70%, compared with the beginning of March.

The goal is to diversify services to increase revenue, partly through the delivery app -- which now hosts 20,000 restaurants in Moscow -- and its new grocery delivery service Lavka.

Gross merchandise volume for its taxi joint venture with Uber -- which owns 37% of Yandex Taxi -- fell 60% in Moscow year-on-year in April -- down 70%, compared with the beginning of March.

Yandex COO Greg Abovsky told the Financial Times the company is willing to buy out part of Sberbank’s 50% stake in the joint venture. He claims that Yandex’s experience delivering groceries to Russians who are under lockdown could be applied to ecommerce, which could put the company in direct competition with Amazon.

The new moves are not easily made. Last year Yandex set up a “public interest fund” that gives the Kremlin a veto over key governance decisions. The company also added two Kremlin-appointed board members, according to one report. Foreign influence fears prompted the move, especially that U.S. investors, who own most of Yandex’s common stock but not its voting rights, would overtake the company and gain access to its data on Russian users. 

“Although Yandex said the Kremlin has no influence over its operations, lockdown conditions have highlighted the difficulties of negotiating its dominant position on the Russian internet with increasingly censorious regulators,” wrote the Financial Times. “When opposition activists used its navigator app’s comment function to organise online ‘protests’ by leaving angry messages outside government buildings on maps, Yandex quickly removed them on the grounds that they were off-topic.

Yandex also apologized after an experimental news story feature that appeared next to search results about opposition leader Alexei Navalny served up negative content.

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