Recent article in highly authoritative US financial publishing house Bloomberg about grave doubt American experts on plans of largest search engine Yandex to globally extend its foreign niche has provoked a heated discussion in media, information agencies, blogs, and social networks. They have represented a mixture of patriotism (Americans do not believe in Russia!), skeptical assessments (why have our CIS experts not been asked) as well as arguments of marketing experts, Internet technologies specialists, and investors, for quotations of Yandex and Google are represented at US largest exchange.
Does Yandex have any chances to succeed in competition with Google, what are the strengths of both search engine, and what are the objective terms for the leader of the market niche to change? “Market Leader” experts were trying to find answers to these questions.
What are Bloomberg’s arguments in favour of doubt on Yandex chances to compete with Google outside CIS
Bloomberg analysts suppose that popular Russian search engine Yandex, which has set a goal to expand its presence abroad and conquer new markets, is unlikely to reach the set goals due to strong positions of internet giant Google.
1. Popularity of Yandex around the Russian Federation has considerably increased last autumn during the period when Apple released its maps for sheets and smart-phones, which have been met with critical remarks from many users. Google map attachments have consequently gained popularity in the United States, whereas the number of downloaded Yandex maps has risen in Russia more than twice.
2. As stated by Bloomberg, at Russian market Yandex has considerable advantages over its rivals Facebook and Google due to preference of Russian citizens to use Russian-language services rather than English ones. The same concerns popular networks Vkontakte and Mail.ru Group Ltd. However, due to gradually smaller demand at domestic market, Yandex is going to expand its foreign activity. Experts, in their turn, are rather skeptical about the chances of the Russian corporation to leave the borders of the former USSR.
It is worth mentioning that international expansion “is not bad in theory, but in practice it is very difficult to compete with such experienced rival as Google," admits David Ferguson, analyst of Renaissance Capital. Besides, Yandex certainly has to "invest much money, having no guarantee to succeed," he specified.
3. Yandex and other Russian companies have started international expansion. Yandex targets at Turkey, whereas social network Vkontakte has planned to gain benefit from increasing its activity in the countries, where many Russian citizens live; for example, Israel, Germany, and the USA. Mail.ru stakes on the market of online games in Asia, thus its first steps towards the goal included online game services in Japan, China, and South Korea. Besides, Yandex states that it has chosen Turkey because of steady rising Internet audience. The search engine is also planning to increase its share at Turkish market to 35 percent within five-year time. Its current share amounts to 1.4 percent, whereas Google occupies the rest 93.7 percent, as informed by ComScore.
4. "The task of Yandex looks rather ambitious," admitted Aleksandr Vengranovich, analyst of Otkritie Capital. According to him, it has taken Google 5 years to occupy 26 percent at Russian market; what is more, it has taken over the largest part of it from Yandex.
5. According to Bloomberg, until now success of Russian companies has been provided by demand in the countries of former USSR, where about 20 million people are Russian-speaking. However, the agency informs that they are not the leading companies even there: the share of Google at Ukrainian market amounts to 58 percent, the share of Yandex – 30 percent, and in Belarus Google occupies 43 percent, whereas Yandex occupies 41 percent.
"Russian companies will find it difficult to compete with large-scale rivals at international markets, as the latter were the first to come, introduce themselves, and become more financially strong," adds Anna Lepetukhina, analyst of Sberbank Investment Research.
Masterforex-V experts, bloggers, and social networks on competition of Yandex and Google
“Yandex search engine is a leader in Russia, Google - worldwide,” explained a well-known Canadian marketing expert of Evgeny Olkhovski, “does Yandex have any chance to become the world’s search engine No. 1 in the nearest years? Certainly, no, neither do Russian Odnoklassniki or Vkontakte have any chance to overcome Facebook and Twitter in the niche of world social networks at the markets of the USA, Mexico, Brazil, Australia, EU countries, Asia, etc. The search engines are very different; besides the RF, Yandex has become the leading search engine in Ukraine, Belarus, Kazakhstan, and has entered Turkish market.”
“Why has Bloomberg raised the issue, knowing the evident answer beforehand? That’s where the hidden point of Bloomberg article is to be searched for,” supposes the Canadian expert. “In my opinion,
American experts are concerned about the mere fact of Russian companies entering the global market, outside CIS countries – Yandex in Turkey, social network Odnoklassniki.ru in Uzbekistan, Vkontakte in Russian-speaking Germany and Israel, Mail.ru in computer games sphere of Asia, namely, China, Singapore, Hong Kong , Thailand, etc. Before this, there seemed to happen the opposite process - Google was gradually winning the niche of search engines from Yandex in the RF. Yandex may have its revenge in Turkey, where Google owns 93.7% of the market niche. Just imagine how excited Yandex investors will be with every percent of the market niche that Yandex will take back from Google in Turkey,” supposes Canadian expert.
“Some people may be concerned about investors’ certainty in sustainability and future profit of Yandex, whose shares are steadily kept by investors,” explained one of famous traders at CIS exchange Igor Vasev, head of sub-department in , “this is happening despite the widely spread in December-January information that Yandex largest shareholders have put up 8.35 million shares of Yandex for sale; every beginning trader knows that this is a signal for sale in order for Yandex shares to collapse. However, analysts of have notice right away that the outcome of the situation is doubtful.” For more details see the article “Will Yandex Shares Drop or Rise: Discussions of Traders and Analysts”.
The chart of Yandex and Google quotations at stock exchange is worth attention:
- shares of Google grow quicker;
- Shares of Yandex drop... slower, which speaks about rather stable certainty of its largest investors in the future of its shares.
”Modern search engines Yandex and Google are not mere internet websites, profit from its shares is policy. Will Russian company manage to win the market niche in Turkey from the USA. This is not mere prestige and money for banner and continental advertizing,” explained the expert of Evgeny Antipenko from Odessa, Ukraine, “This is
- deep and objective marketing research of Turkish market from within, namely, seeing the change of trends, attitude of users to power and opposition, to parliament and Prime Minister, to Russia, Israel, Iran, Syria, Armenia, Azerbaijan, Kurds, etc. within the country.
- opportunity to have indirect impact on Turks’ attitude: Yandex news, blogs, relevance of articles in search requests that describe one point of view or another, banner advertisements at elections, opportunity to express one’s own point of view on Russia, CIS, USA in order to be heard by millions of Turks, and so on,” supposes Evgeny Antipenko, who finds “nothing strange about evident the sarcasm that Bloomberg has expressed on Yandex in Turkey”.
“Argument of Bloomberg on the fact that Yandex certainly has to invest much money, having no guarantee to succeed (David Ferguson, analyst of Renaissance Capita) seems totally childish,” supposes Ukrainian expert, “for any specialist knows that the first step for winning a market niche is not money, but ideas and technologies (certainly provided that there is money). Modern world is characterized by confrontation of ideas and technologies, leadership over which brings money, but not on the contrary: the winner is not necessarily the one who has more money.
According to the “Market Leader”, social networks Odnoklassniki.ru and Vkontakte show other priorities of Russians and Ukrainians to confrontation between Yandex and Google.
- most bloggers and users welcome competition between 2 mega search engines: "taking into consideration the fact that the system of search is different, it is better to look for information using both, Yandex and Google," suppose users of Odnoklassniki.ru.
- some people prefer Yandex due to “variety of services”, others prefer Google.
- Yandex should not try to enter Turkey, it should rather concentrate on CIS market, join mobile applications, thus creating own eco-system and releasing its variation of Android smart-phones with company’s services.
- most users agree on the fact that Internet monopoly will have negative impact on users. The stronger is the competition between Yandex and Google, the more new and interesting services will each of them suggest.
“Market Leader” and hold a questionnaire in Discussion Club at forum for traders and investors: in your opinion, Bloomberg article on competition between Yandex and Google is a proof of
- the topic of the article “Yandex has Small Chances to Compete with Google in Turkey
- US concern over Yandex progress outside CIS
