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Written on 12th January 2009
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Ernst-Jan Pfauth, editor in chief
Another lost battle for Google in Russia. After the billboards in the streets of Moscow, the failed acquisition of contextual advertisement company Begun, and an army of Russian oligarchs on the wrong side – Google now lost the prime search spot in Mozilla Firefox to Yandex.
Harvey Anderson, VP and General Counsel of Mozilla Corporation, wrote on his personal blog:
In October, we asked for feedback on creating a deeper partnership with Yandex, one in which we would make Yandex search features the default in our Firefox Russian language builds. Over the past few months, we have listened to feedback, talked with our localizers, studied the trends of our Firefox Yandex builds, and reviewed the Yandex user experience. All this activity led us to the conclusion that our Russian users really wanted direct access to the Yandex search services in official Firefox RU builds.
Thus Yandex will be standard in the Russian release of Firefox 3.1.
Firefox has about 20 percent share of Internet browsers in Russia and Yandex is Russia’s leading search engine with 54 percent share of searches.
[Hat tip: Quintura (who else?)]
Written on 12th October 2008
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Ernst-Jan Pfauth, editor in chief
After Russian investment group Finam spread rumors of a delayed Yandex IPO last September, it now appears to be definite. According to business daily Kommersant, several investment bankers have said that the Yandex shareholders decided to postpone the $2 billion IPO – which was planned for fall 2008.
After Finam told the press its market expectation was that the IPO would be delayed due to the unstable political situation in Russia, Yandex didn’t confirm this. So the general opinion remained that the IPO was still on track. Yet after the recent credit crunch, it isn’t too surprising that the shareholders aren’t fond of an IPO.
The private equity investors Internet Search Investments and Baring Vostok Capital Partners own 35% stake in Yandex. Tiger Technologies owns the other 15% stake in the company.
Hat tip, as always when it comes to Russian news, Yakov Sadchikov from Quintura (read about his secret here).
Written on 23rd September 2008
1 COMMENT
Ernst-Jan Pfauth, editor in chief
Russian business daily Kommersant reports that oligarch Alexander Mamut’s investment company ANN acquired the largest mobile phone retailer in Russia, Euroset. At first hand, this doesn’t seem to be a web-related topic, yet I decided to report about it as it symbolizes the growing influence of oligarchs on the Russian tech scene. Mamut, who owns a significant stake in LiveJournal-owner SUP, is well-known as a Kremlin loyalist.
Alexander Mamut
The deal valued Euroset at an enterprise value of $1,25 billion including $850 million in debts, Kommersant said.
Here come the oligarchs
In the beginning of August, Alisher Usmanov announced that he wanted to buy a 20 percent stake in Russian search giant Yandex. This man is the founder of Metalloinvest (mining company, €3.3 billion a year) and owner of publishing house Kommersant.
Gentlemen like these two keep buying stakes in Internet and tech companies. Many critics fear that at some point, these oligarchs might partner up with Putin to secure the government’s control on this booming and important industry. During the announcements of the LiveJournal and Kommersant acquisitions, storms of protest arose. All without any consequences.
I hope these critics are mistaking, but I’m afraid that in a few years, we have to admit they had been right all along.
Written on 4th September 2008
3 COMMENTS
Ernst-Jan Pfauth, editor in chief
The day before yesterday, rumors spread around the web about this year’s biggest tech IPO. Russian search engine Yandex wouldn’t want to go to NASDAQ this year, due to the unstable political situation in Russia. During a press conference, Russia’s most important investor sort of canceled the deal. As it turns out, it was a nice piece of wishful thinking. The Yandex IPO plan is still on track.
The Russian Internet insider news site Roem.ru reported that Finam just announced its market expectation. It wasn’t official information from Yandex. I guess things got messed up because of language barriers, and Profy got the wrong information. The high numbers mentioned in the post, an IPO of around 3 to 5 billion dollars aren’t correct either. We’re still talking about a $2 billion IPO on NASDAQ in fall 2008.
Written on 2nd September 2008
2 COMMENTS
Ernst-Jan Pfauth, editor in chief
With the upcoming $1.5 billion to $2 billion IPO of Yandex, certainly the biggest tech IPO we would have seen in a while, the Russian search giant got a fair amount of attention lately. The Times published an (somewhat boring) interview with the founder, the blogosphere commented en masse on this story.
Some bloggers wondered whether Yandex would really consider to enter the stock market this fall, given the Russian-Georgian conflict. Would investors be willing to put their money where the war is? Turns out they probably don’t, because Yandex won’t take the bet this fall. 2009 will be the year of the IPO.
Profy notes this has allegedly been announced during a press conference, organized by one of the leading Russian investment funds – which is known for its multiple investments in IT companies. The valuation has become higher though, as it now circles around 3 to 5 billion dollars.
Meanwhile, Quintura reports about a funny follow up on Google’s act of desperation on the streets of Moscow. World’s largest search company spent half a million dollars earlier this year on billboards. Yandex now has its own version, called “Any Questions?”. Cool detail, users can create their own billboards. Here’s my try:
Written on 29th August 2008
3 COMMENTS
Ernst-Jan Pfauth, editor in chief
Russia’s largest Internet portal Mail.ru has acquired a 30% stake in its online dating partner Mamba, Quintura reports. They had to pay $15 million for a chunk of the enormous dating service – which offers dating platforms to several big Russian Internet parties.
Mamba has an user base of 10 million people. 1.5 to 2 million of them are looking for the love of their life (or a one night stand) on a daily basis. Together with Loveplanet (which is a destination site), Mamba holds 90 percent of the Russian $21 million dating market.
Not surprisingly, Mamba’s financial numbers are also impressive. The company reported revenues of $9.2 million in the first half of 2008, which meant a 68% percent increase from the first half of 2007.
Mail.ru had to pay the 15 million dollars to Finam, a Moscow-based investment and financial services group that acquired a controlling stake in Mamba in October 2005. It’s their third hit this year, as they recently also sold their stakes in Begun (to Google) and computer game publisher Buka.
There’s interesting twist to this deal
The people at Rambler HQ – that other big Russian web portal – won’t be amused by Mail.ru’s move. Rambler’s dating section uses Mamba’s platform, and accounts for 25 percent of Mamba’s usage. How will they feel about a competitor buying a rather large stake in the same service provider?
If Rambler decides to move its dating section to another platform, the revenue of Mamba could decline by 25 percent. Then Mail.ru will temporarily become a victim of its own deal.
Written on 27th August 2008
11 COMMENTS
Ernst-Jan Pfauth, editor in chief
Russia has the fastest growing Internet population in Europe, research by ComScore shows. The study about the online behavior of European Internet audiences (based on data from the comScore World Metrix audience measurement service) learns us that the Russian Internet population has grown with 27 percent past year up to 17.5 million visitors.
The total number of European Internet users grew with 8 percent during the past year to 241.8 million visitors in June 2008. Next to Russia, countries like France (up 21 percent to 31.5 million visitors), Spain (up 15 percent to 16.2 million visitors), and Ireland (up 15 percent to 1.6 million visitors) also see the Internet becoming a more important part of their society.
See all the interesting stats in the press release. Here are some more highlights:
- Internet adoption was highest in the Netherlands, where 82 percent of the country’s total population age 15 and older went online in June.
- U.K. Internet users spent the greatest amount of time online, averaging 28.5 hours per user per month, while German Internet users recorded the most page views, averaging 2,906 pages per visitor.
Oh Russia
I could fill this blog with exciting news from Russia. Whether it concerns search giant Yandex, the iPhone launch, or dodgy oligarchs buying web stocks, the country’s Internet industry never ceases to amaze me.
What makes the country extra interesting, are the contradictions. While Russia has the fastest-growing Internet audience in Europe, it ranked near the bottom in terms of penetration and page views. Two conclusions can be drawn here: Russia still has a long way to go before they’ve bridged the digital divide and the Russian Internet market will become incredibly important when it has reached its full potential.
Written on 25th August 2008
1 COMMENT
Ernst-Jan Pfauth, editor in chief
Yandex has changed its Roman character logo into one depicting the company name in Cyrillic. According to Yakov from Quintura, this means Yandex has become a househould name in Russia. The new logo, by design consultancy Art. Lebedev Studio must stimulate the rise of Yandex’s brand, which is on its way to becoming one of Russia’s best-known brands.
Yandex CEO Arkady Volozh
“Our technology is better suited for the Russian market,” Volozh told The Sunday Times. “We have brilliant mathematicians and programmers. We are very strong on data analysis and have developed better technology, which is cutting-edge in Russia. We are constantly inventing new programs to stay ahead.”
So there’s no world-domination tour coming up for Yandex. But why would they? Operating in one of the world’s most exciting Internet markets, the engine is attracting 8 million people per day to its site and holds a share of 55 percent. That’s the bases of their success story: the victory over Google, which only holds 21 percent of the Russian search market. Yes, Yandex is booming. CEO Arkady Volozh knows this, as he told The Times in an interesting interview that “in two years since Google opened an office in Russia we haven’t lost a single specialist to our competitors because Yandex is one of the best companies to work for in Russia.”
The Sunday Times article by Mark Franchetti proves an interesting insight in the career of Volozh, a mathematician who was 24 years old when he first saw a personal computer. Touchy subjects like goverment-supported oligarchs aren’t discussed though. Volozh only says he’s not considering a sale.
Written on 4th August 2008
8 COMMENTS
Ernst-Jan Pfauth, editor in chief
There’s a new loner in the wild west of Russian search engine land, where millions of dollars are spent and Google is just small potatoes. Alisher Usmanov is his name. This man is the founder of Metalloinvest (mining company, €3.3 billion a year) and owner of publishing house Kommersant. As a true media visionary, he has decided to invest in the Russian Internet industry. And when a business man like him enters a market, you know he’s gonna do it with a bang.
What about an acquisition of a 10%-20% stake in Russia leading and Europe’s no. 3 search engine Yandex ($167 million in 2007)? Usmanov wants to buy them from the founding fathers of Yandex as well as via the shares at the upcoming IPO on NASDAQ. To give you an idea about the importance of these negotiations, the IPO was valued up to $5 billion. That means the stake could be worth a staggering $1 billion.
The Quintura blog offers some more background info on Alisher Usmanov’s Internet adventure. Usmanov might be encouraged by the Russian government to get a grip on this booming Internet industry, like he was when he bought the newspaper Kommersant.
Written on 18th July 2008
3 COMMENTS
Ernst-Jan Pfauth, editor in chief
A few weeks ago I wrote a sarcastic article about Google’s efforts to gain popularity in Russia. Native search engines like Yandex and Rambler dominate this market, and Google obviously has been feeling threatened by that. So in the first week of June, the search giant started a billboard campaign in Moscow. This move looked like it was made out of desperation. Today Google made a more serious effort by acquiring Russian contextual advertising service Begun for 140 million dollars from Rambler. 
Probably to conquer some market share – as it grants them access to 40,000 advertisers and 143,000 partner sites – but could there be a second – more important – reason? Maybe this acquisition has something to do with Project Spaghetti – Google’s plan to generate more advertising revenue from YouTube.
Begun introduced contextual video advertising just last month
As I reported on June 30th, Begun integrated contextual advertising for video content on Rambler’s video sharing community, Rambler Vision. From that day on, 1.3 million visitors per month (and counting) would see the ads. Advertisments are based on the tags and are sold on a CPC bases.
This ad-introducing experience might come in handy when Google integrates video advertisement on YouTube.
YouTube only generates $200 million a year
Because YouTube badly needs a advertising strategy. Last week, the Wall Street Journal got two anonymous sources talking about YouTube’s failing advertisement strategy. The video giant generates 10 billion video views a day, but ‘only’ manages to make $200 million a year from advertising. Thus the Google-owned company might introduce pre and post-roll ads, said the sources to WSJ.
Welcome to the Valley, now let’s make money
You see the connection? Not only will Google gain more popularity in Russia, it has also acquired a company that knows how to make money from ads. Google will gladly welcome these fellas in Silicon Valley to turn YouTube in a profitable business.
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