Outside of Russia, the U.S., China, South Korea and the Czech Republic, there is little, if any, competition in search. While no other search provider can yet challenge Google on a global scale, Russia’s Yandex is out to prove that the game isn’t over yet. Last year Yandex, Russia’s most popular Internet search engine, raised $1.4 billion in an initial public offering on Nasdaq, and it is using its war chest to expand outside of its home market, hoping to get a leg up on Google by introducing search engine technologies that are particularly well adapted to developing markets.
Since September Yandex has been making a big push in Turkey. If things continue to go well in that market the company says it will seriously consider further international expansion.
“If you have 99% market share it is almost impossible for others to come in and start to compete,” says Yandex Chief Technology Officer Ilya Segalovich, who co-founded the Russian search engine company with Arkady Volozh, a scheduled speaker at DLD Moscow. “But in some markets, like Turkey and maybe some others, we are mounting quite a unique attempt to disrupt this picture.”
While Google controls more than 90% of the search market in Western Europe, it is not as well-established in the rapidly-growing Turkish market, which has an estimated 35 million Internet users. Turkey is already the sixth-largest Internet market in Europe, and boasts the third-highest number of average hours spent online per user in Europe — 33.9 — and the highest average number of page views per visitor, according to a February 2012 comScore Media Metrix report.
Instead of just localizing its existing services Yandex custom-built an entirely new product — tailored specifically to web users in Turkey.
A unique, local approach has worked well for Yandex in Russia and the CIS. Google entered Russia in 2001 and 11 years later remains far behind, despite its global brand and the bundling of its search engine with its Chrome browser. Yandex retains over 60% of the market in Russia, which, according to comScore, is now the biggest Internet market in Europe.
“We decided to try and apply the same idea, very much locally focused, in Turkey,” says Segalovich. “Google’s approach is global; it develops something and then rolls it out across the world. Our approach is to be more local, and focus on things tied to a country’s specific culture, such as a different way of paying. We look at what is missing in a market and then develop that.”
One of its most important – and popular — differentiators in Turkey is its traffic tracker map application. In the U.S., Western Europe, and most developed countries governments use sophisticated technology to track traffic, so there was no need for Google to develop such a service when it started out.
But such technology is lacking in Russia and in many developing countries. Moscow, for example, is known for its traffic jams. Yandex developed, back in 2005, a way to distribute an app so that drivers could send their locations, and based on speed and direction draw the map of traffic in real time. Now it is applying the real-time traffic technology that it has been pioneering for seven years in Russia to Istanbul and Ankara.
In Turkey, Yandex says it also has first mover advantage in several areas. Google Street View has not yet been introduced, so Yandex launched its own Panorama service. The company is also ahead of Google in offering free streaming music through search pages.
Yandex has a few other advantages: it has already developed its own international index. (In contrast, Chinese search giant Baidu relies on Bing outside China). It also offers products that go way beyond search, including photo-sharing and professional networking, its own mail service (protected by its own anti-spam technology), news clustering and aggregation, blog search, free Web hosting, price comparison between Internet e-tailers, mobile search, and a homegrown electronic payment system.
“Clearly Google has won the search market as it is now,” says Internet guru Esther Dyson, a Yandex board member. “But search is changing. The real question is what comes next.“
Segalovich believes the company is well positioned to provide an answer. Building on its 20 years of experience in search, Yandex is honing semantic technology that will not just extract data but present it on a web search page and help users to interact with the information.
To stay ahead of the game, Yandex has been buying four to six start-ups a year and is hunting for more.
The company is shoring up its mobile presence through the acquisition of mobile software developer SPB Software. Like China’s Baidu, Yandex is likely to build on top of Android. Expect several consumer-focused launches in this space in late summer and early next year, says Segalovich.
In the meantime the company is making a concerted effort to expand its sphere of influence in the global tech sector. It recently invested in Seed Camp, the London-based early-stage seed investment fund and mentoring program for start-ups. Yandex will acquire a small stake in start-ups supported by Seed Camp, a way of getting a window onto new technologies. “We also have some plans for start-ups to use our APIs,” he says. Beyond that, Segalovitch says Yandex wants to help young European companies – including those in non-search-related fields – to expand into Russia, yet another way for Yandex to show the world that Google is not the only game in town.