Russian search giant Yandex has finalized the sale of its two leading media properties to local rival VK, owner of the social network of the same name.
The deal to sell the products, Yandex’s algorithmically sorted news aggregator (News) and blog recommendation platform (Zen), was signed back in April. But today’s binding agreement goes further than that – including the sale of the main page, Yandex.ru, which integrates content from News and Zen into the search page, turning it into an information-rich (critics say misinformation-rich) portal that includes a number of feeds with infinite scrolling content.
This means that after the sale is complete, visitors browsing Yandex.ru will be redirected to a renamed version of the page, dzen.ru — which will be controlled and developed by VK, the future owner of Yandex’s two media products.
We also understand that the VK version of the Yandex.ru portal will still include the Yandex search service — but only as a standard iframe integration (which means it won’t get access to search data). So for ordinary users of Yandex.ru, the only immediately obvious sign of a change of ownership will be the redirected URL.
As we reported in June, Yandex is signaling an upcoming shift in focus to an alternative local homepage, ya.ru — a bare-bones search portal it has owned for decades — alongside the denser Yandex.ru page, where news content dominates the experience. The latter portal has increasingly become a major reputational headache for a business that prefers to claim to be just a neutral tech firm, so it’s easy to see the appeal for Yandex of moving to a simple search-focused homepage.
“Yandex’s board and management have concluded that the interests of the company’s shareholders, including its Class A shareholders, are best served by pursuing a strategic exit from its media business (other than entertainment streaming) and a shift in focus on other technologies and services, including search, advertising, online-to-offline transactional businesses and a number of b2b technology businesses, among others,” the company said in a press release today.
“The board of directors approved the transaction. In line with this strategic focus, ya.ru will become Yandex’s home page and the key entry point to Search, Mail and other non-media services,” it added – indicating the main service for the new home page and for a new Android The app it launched focused on AI assistant technology called Yandex with Alice will be its search engine.
“Upon completion of the transaction, the current main Yandex application for Android will change its name to Yandex Start. It will then function as a browser and users will be able to choose the home page in their settings. The Yandex app for iOS will continue to work as before, but without Zen and News.
“After the transaction is completed, the current main page with News and Zen will be renamed dzen.ru and will be further developed and controlled by VK (including control over appearance, content, etc.). The related brands and technologies of News and Zen will also be transferred to VK.”
A source close to the matter told TechCrunch that the sale of the content services has become a “strategic priority” for Yandex since the outbreak of war in Ukraine, which led to a sharp increase in censorship by the Russian state. “It has become very difficult to remain independent in the presence of services like News and Zen,” they suggest.
Yandex has faced sharp criticism for its platforms’ role in spreading and expanding state propaganda from the likes of imprisoned Kremlin critic Alexei Navalny – who in one public attack earlier this yearaccused the company of a “blatant, shameless lie” in claiming to display “news” on its homepage, given how its news feed amplifies state propaganda.
A number of top Yandex executives have also been sanctioned by the EU – although the company itself has so far avoided formal sanction.
It remains to be seen whether the sell-off of the two main online content channels, which the Kremlin has managed through a regime of tightening media licensing and regulation to expand its talking points, will result in the sought-after reboot of Yandex’s reputation.
The price for Yandex to leave the media seems high, as it essentially loses the ability to use its own brand locally by handing over control of the Russian portal (and all the traffic it generates) to Kremlin-linked rival VK – which only looks set to deepen the state takeover of the country’s digital information sphere.
In return, Yandex is acquiring 100% of VK-owned food delivery service Delivery Club “as sole consideration for those assets,” the press release said — confirming that there was no cash payment associated with the transaction. (And on-demand delivery is hardly a post-pandemic success story, as food delivery platforms are hit by shrinking consumer demand due to the global economic downturn and inflationary pressures.)
“Delivery Club, Russia’s leading food and grocery delivery service, will become part of Yandex’s e-commerce, mobility and delivery segment,” Yandex said. “After the transaction is completed, users will be able to continue using Yandex Eats and Delivery Club applications, while couriers working with Delivery Club will join the Yandex Pro technology platform. Yandex intends to support the Delivery Club brand.
The sale of Yandex’s media properties still needs regulatory approval to complete — with the company noting it is subject to antitrust approval in Russia, but adding it expects the transaction to close in the “coming months.”
“We couldn’t get rid of News and Zen any other way,” our source close to the matter told us, suggesting that the requirement that the Kremlin approve major business changes has limited Yandex’s options.
vice versa in 2019the Russian firm agreed to a corporate restructuring that increased the Kremlin’s control over the business by giving a veto over key company decisions (including on intellectual property) to a body with close ties to the government.
“It was really the only way to focus on technology. We have a lot of people working at Yandex. We didn’t want the company to close,” the source added. “This decision was very difficult for us, but there was no other way to deal with it.”
At the beginning of this year, in interview with TechCrunchYandex’s former deputy CTO, Grigory Bakunov, told us the company’s management was naïve about the risk of a Kremlin takeover of the algorithmically-driven content sorting technologies it was developing — and its executives missed earlier chances to proactively block products that the state managed, through a combination of legislation, regulation/licensing, and by installing state backers on Yandex’s board, to “virtually take over” by 2017 (with the passage of a law requiring news aggregators to use only state-approved sites as news sources) .
The strange prospect of a domestic internet giant handing over its own branded search portal — and all the traffic it draws — to a rival is just the latest “through the looking glass” moment for the Russian internet since the Kremlin decided to invade its neighbor. In another example earlier this summerYandex chose to delete national borders from its Maps app in an attempt to sidestep political pressure over where the software draws borders in Ukraine.
The Kremlin’s tighter regulations on search services in Russia could yet lead to more such painful lapses at Yandex.