“Yandex” has warned investors about new political risks in Russia

Dangerous laws

Internet company “Yandex” on Tuesday, March 22, has released a report by the end of 2015: under “Risks” she said that actions of the Russian government can be interpreted as “politically motivated”. Despite the fact that “Yandex” in its “political neutrality”, the company’s business is sensitive to legislative initiatives, the report said. “Public companies must tell investors about any changes in regulation that may affect the company and its services, as well as to describe all risks, even hypothetical,” — said the representative of “Yandex” Anna Ivanova-Galitsina.

In particular, we are talking about new legislative initiatives last year. For example, in February 2016 in the state Duma was introduced a bill on regulation of the segment of news aggregators: in the current version of the document is, for example, the ban on foreigners owning more than 20% of the service, the audience of which exceeds 1 million people.

“If this proposal in its current version is accepted, it will have a significant impact on “Yandex.News” and other services (…) In particular, we have to allocate additional resources to adapt the structure of ownership of the service in line with the new regulatory standards, change the principle of operational management of a service or even refuse to use “Yandex.News”, — stated in the report “Yandex”. “Yandex.News” work on an automatic algorithm, but remain supporters of the idea that the service “reflect certain political views and sets a certain political agenda,” according to the report.

Regulation can affect work and other services of Yandex — “Yandex.Market”. In 2015, the CPS suggested that commercial aggregators, additional liability before the buyers of goods that are posted on these platforms: for example, the Agency wants to punish sites for incorrect information about the product. If the initiative of the CPS is accepted, “will have to change the essence of the work of our services, including “Yandex.Market”, and pay according to the new requirements,” emphasizes the company.

In its report “Yandex” is also reminiscent of the attempts of the authorities to regulate the market of online taxi services, a leading player in Russia now is “Yandex.Taxi” (according to the Moscow chamber of Commerce and industry, the share of transport service of “Yandex” in the capital is about 60%. — ). So, in August 2015 “Yandex.Taxi” checked the FAS, and at the beginning of this year the Moscow mayor’s office threatened to ban its competitor Uber. The intervention in the field of taxis may result, in particular, additional costs, says the report.


Yandex is the largest Internet company in Russia, revenues in 2015 — 59.8 billion rubles, net profit — RUR 9.7 bln. According to the service Liveinternet.ru in February 2016 on “Yandex” it was necessary to 57.8% of search queries in Runet. The closest competitor — Google — is on the Russian market of 35.4%. The main markets where Yandex — Russia, Ukraine and Turkey, also we have offices in Switzerland, Germany, USA and China. The parent company registered in the Netherlands. In 2011, “Yandex” has held an IPO on the Nasdaq, the company was valued at $8 billion In recent years, the value of securities of “Yandex” has dropped significantly. As of March 22, the company’s capitalization is $4.8 billion.

Dangerous markets

“Yandex” also has warned investors that the company’s business could be affected further aggravation of Russian-Ukrainian and Russian-Turkish relations. The transition of Turkish market in the area of risk occurred last year after Turkish air force shot down a Russian attack in the area the Turkish-Syrian border. In 2015, Vladimir Putin has imposed restrictions on the import of Turkish products in Russia and the work of Turkish companies in the Russian market, and limited air links between the countries.

In addition to the protracted political conflict in Ukraine from the beginning of 2016 entered into force restrictions on the import of Ukrainian products to Russia and was repealed by the free trade regime. Still measures undertaken by the Russian authorities, does not affect the work of “Yandex” in Turkey and Ukraine, noted in the company’s annual report. However, if these countries retaliate against Russia or Russian companies, negative consequences for business “Yandex” can occur.

Now “Yandex” in Ukraine and in Turkey are adapted for local markets search engine. The share of search of “Yandex” in Turkey from March to September 2015 has increased from 1.8 to 4.8% (data by Statcounter), but by February 2016 fell to 3.4% (the “Yandex” provides data to comScore, according to which the share of search in Turkey for desktops in January was 6.6%. — ). According to Liveinternet, a share “Yandex” in Ukraine over the past year decreased from 32.8% to 31%, the Russian company is still inferior to the superiority of Google (61.3% as of February).

As the risk for business “Yandex” mentions in the report and sanctions imposed by the West against Russia because of the conflict in the South-East of Ukraine. Although the sanctions do not affect directly the structure of the head of “Yandex”, in December 2015, the U.S. Treasury Department has made a “daughter” of the Internet giant, and Sberbank — “Yandex.Money” — the list of companies who have fallen under sectoral sanctions (they do not ban American partners to work with companies under sanctions, but limit their access to Western financing).

The Representative Of “Yandex.Money” Eugene Arnautova explained that the company is not engaged in funding, so the sanctions will not affect its business. However “Yandex” in the report warns that the sanctions could result in volatility and reduced liquidity of shares of companies whose business is in Russia, the same goes for the Internet giant.