Whether you're in San Francisco or Bangalore, Sicily or Rio de Janeiro, if
you're looking to do an internet search, chances are Google is your go-to.
The multinational tech company has cornered the search market, capturing
roughly 90 percent of the global market share. But Google's domination
hasn't extended everywhere. It's banned in China and Russia is one of the
few countries where it lags behind. Here, 55 percent of the market belongs
to the homegrown company Yandex.
So the Internet search market in Russia is very interesting. It's kind of
anomalous globally in that it's not like most other markets. So the
biggest search engine in the Russian market is Yandex. But the second
biggest is Google, and Google.ru. So really it's basically a duopoly
between Yandex and Google.
Today, Yandex has 65 percent of the market share on desktop search queries.
And while Google still leads the mobile market, it has recently lost
ground. In 2017 it had 60 percent of the mobile market share, but by 2018
it was down to 53 percent, largely thanks to an antitrust suit Yandex
brought against Google. So why do the majority of Russia's 144.5 million
citizens choose Yandex? Yandex launched in 1997 a year before Google. But
Google didn't even move into the Russian market until 2004.
Yandex had a big head start on Google, which enabled it to get this
dominant position during the infancy of the industry. Today of course,
it's not just a search engine. It's actually the biggest technology
company in Russia. It's the biggest media company in Russia.
And while Google has been in Russia for 15 years now, experts say Yandex is
still better at interpreting Russian language searches, even if there are
misspellings or grammatical errors.
You know, Yandex is developed as a Russian language search engine. And the
morphology of the Russian language, not to mention the alphabet even, from
a very basic level is quite different from that of English.
Russian is a highly inflected language. Words can have up to 20 different
endings. There are three possible genders for each noun and gender affects
the rest of the words in the sentence. So perhaps it's no surprise that
the Russian market is better served by a company comprised of native
speakers. Additionally, Yandex does a better job of serving Russians
living abroad where there are no Russian keyboards. When Cyrillic
lettering isn't an option, Russian speakers phonetically spell out Russian
words. This is called "CrazyFont."
So it's basically Russian terms written in the Latin alphabet. And that's
quite difficult for Google to really handle. So that's something that
Yandex again, it has that built into it.
Like Google, Yandex has expanded far beyond its origins as a search engine.
It offers email, cloud and online payment services, streaming music, news
aggregation, live traffic maps, and Yandex.Taxi, which merged with Uber
last year. It is testing self-driving cars and building out its e-commerce
unit called Yandex.Market. But the Russian government has increasing
control over Yandex. In 2017, Russia implemented the news aggregator law,
which requires sites like Yandex to be responsible for all content on its
platform. So now, Yandex .News only aggregates from sources with official
media licenses, which gives the state greater control over what news gets
surfaced. Sites deemed extremist are blocked.
The Russian authorities are increasingly categorizing political information
as a form of extremism. You know, they don't have the permission to
protest on the day they want to protest in the place they want to protest, so they call that extremism.
Yandex has little choice but to comply. But for a global company like
Google, which positions itself as a champion of freedom of information,
state regulations may be harder to swallow.
The greater surveillance of online traffic in Russia, that does propose
something of an ethical issue for Western companies like Google,
particularly if your slogan was "Don't be evil."
However, Russians don't necessarily view Google as inherently more
trustworthy than Yandex.
The revelations from Edward Snowden and the activities of the NSA etc. have
actually gotten quite a bit of play in Russian media. And so a lot of
Russian users would have a distrust of Google, as an American or a Western
company. There's an understanding that Russian security agencies are
monitoring traffic through Yandex. There's an expectation that will
happen. And there is similarly among Russians an expectation that even if
Western countries don't say it out loud, they're doing similar things online.
So McDowell says many Russians figure they might as well support their
local company. Google did not comment on its future plans in Russia but
said in a statement to CNBC that while it remains committed to enabling
access to information, "We consider all valid requests from government
bodies and require advertisers to comply with local law and our general advertising policies."
I mean, I think Google really wants to be in Russia because it's a big
market. It's a really big market. But it's tricky for them, because the
kind of Google, Google has to be to be successful in Russia, it doesn't
really go with the Google that you and I know from the US, the UK and other markets.