Russia’s largest internet Group, Yandex NV (NASDAQ:YNDX) – which claims a market share of 60% of all Russian search traffic – announced an agreement with Facebook Inc (NASDAQ:FB) to access the social network’s Russian user content.
Deal opens up new frontiers to Yandex
The deal would give the Yandex NV (NASDAQ:YNDX) search platform access to Facebook’s users in Russia, Ukraine, Belarus, Kazakhstan, Turkey and other CIS countries. In addition to searching Facebook Inc (NASDAQ:FB) user posts, the agreement allows the Yandex search engine to access other users’ comments on posts.
The non-cash agreement is seen as a win for Yandex NV (NASDAQ:YNDX) because it improves the quality of its search results while Facebook Inc (NASDAQ:FB) receives additional traffic to their web site. There was no mention of user privacy relative to post comments now being searchable in a public search engine.
Russia has become Europe’s largest internet market by audience and is seen as one of the fastest growing in the world. The market is likely to increase by an average of 15% to 20% per year up to 2018, driven by advertising and ecommerce, according to a study by the Russian Association for Electronic Communications and Higher School of Economics and reported in the Wall Street Journal.
Russia has some of the highest internet adoption of any country in Europe. Currently 66 million people, nearly half of Russia’s population, are online and in 2012 the internet industry contributed 1.3% to Russia’s gross domestic product.
Some US companies make inroads
Facebook Inc (NASDAQ:FB) ranked fourth in Russia’s social networking landscape, which is dominated by local players such as Vkontakte, according to a report in Reuters. US firms with products that have made successful entries into the Russian market include Apple’s iTunes and AppStore, PayPal and GooglePlay.
Yandex NV (NASDAQ:YNDX), the parent company, has 239,000 advertisers and boasts 95 million users and offers a popular music streaming service. Yandex NV (NASDAQ:YNDX) had a New York initial public offering in May of 2011 where it raised $1.4 billion, and floated $600 million in convertible senior notes due in 2018 to fund a share buyback program and fund general corporate needs. The stock was initially priced at $25 per share but has since shot up 70% largely on the back of the booming online advertising.