Society

The limits of compromise: how Yandex is falling apart

June 23, 2022

Daria Dergacheva

Postdoctoral researcher at the Center for Media and Communication Research (ZeMKI), University of Bremen, Germany. 

Daria Dergacheva is tracing the history of Yandex, Russia’s search engine that evolved into one of the world’s best digital ecosystems. Its policy of accommodating the Kremlin’s political interests has eventually come at the cost of its disintegration.
The oldest Yandex office in Moscow, 2006. Source: Wiki Commons
The Russian invasion of Ukraine is not only destroying lives, but also dreams, plans, and possible futures for millions of people—including those who until recently were sure that the future looked bright.

It looks like Yandex, the largest and most successful Russian digital platform, is falling apart. Once a huge conglomerate of web-based platforms serving the Russian-speaking market of over 200 million people, it is selling its assets, and may declare default on its obligations. This has happened in just a matter of months, since February 2022.

But this, I will argue, is the price Yandex was going to have to pay sooner or later, as is true for all those Russians who have tried to take advantage of having connections with their authoritarian regime over the past couple decades. It is the price paid by all those who thought it was possible to comply with, and use, the regime, and at the same time be an open, transparent business that does not interfere with politics. “I am not interested in politics” used to also be a mantra that a lot of middle- and upper-class users who enjoyed Russia’s well-developed service sector via the platform economy (such as Yandex Taxi, Yandex car-share, or Yandex food and supermarket delivery—all at very low prices) used to say. Because of this, everyone is paying now, including Yandex, for there is no free market in an unfree society.

Happy Beginnings

Yandex, the Russian largest tech company, was created by two former students of the Institute of Oil and Gas in Moscow, Ilya Segalovich and Arkady Volozh, in 1997. Despite the institute’s peculiar name, both students were doing research in big data applications as early as in 1988. Volozh, like a lot of scientists from the sector in the former Soviet Union in the age of the aftermath of market “shock therapy,” could not have stayed in science. The state of post-Soviet science was in ruins at that time. Instead, he founded a small business reselling and introducing foreign-made computers for newly-founded Russian enterprises.

At the same time Volozh, together with an expert in computational linguistics from the Soviet Academy of Sciences, Arkady Borkovsky, was developing a computer program that could find information in large texts and be specifically tailored to Russian-language morphology. Like many scientists of the post-Soviet generation, Borkovsky emigrated. Ilya Segalovich, a former classmate of Volozh’s, had also been studying the morphology of the Russian language and its application to natural language processing. He became the second partner in developing what later became Russia’s most successful digital platform, Yandex.
"Over the past 25 years, Yandex developed from a primitive text-search tool into the most important and successful Russian digital platform."
In social science, platforms are viewed as types of infrastructure and media, and at the same time as powerful and complex political actors. While Yandex’s infrastructure has never developed to the point of being comparable with that of Google (for instance, it never created an operating system akin to Google’s Android or Apple’s iOS), it has launched a lot of infrastructural projects important to the gig economy. Apart from its earliest versions of mail and news aggregator (2000), millennials in large Russian cities enjoyed using Yandex Taxi (the first Russian version of Uber, it had a joint Uber-Yandex venture), Yandex Food and Lavka (restaurant and supermarket delivery), Yandex Maps (a GPS system), Yandex Disc (its own cloud system), and even its own payments system (Yandex Money). Yandex was second only to Google among the search engines operating in Russia, and it had a very successful IPO in 2011. At one point in time, Arkady Volozh claimed that Yandex would even compete with Google in the European market, aiming for a market share of 30% of search traffic, though this never happened.

A Matter of National Pride

Nevertheless, Yandex had been the only Russian search engine that ever made it into the world’s top five, with 0.47% of the world’s search traffic going through Yandex as of May 2022. It is not surprising that Yandex was also a company that a lot of Russians were proud of. Kind of like Russian ballet but more modern, Yandex was a symbol of a “new” Russia.
"It was equivalent to a Russian Microsoft, Apple, or Google: a company born in a 'garage' which became a tech shining star."
While most of the oligarchs of the ’90s were involved in privatization (a process which is largely seen in Russia as a deeply flawed affair that enabled a very few to enrich themselves at the expense of the rest of the Russian people), Volozh and Segalovich were self-made Russian billionaires. Unlike most of the privatized companies that “cooperated” with the government in one way or another, Yandex was self-sufficient and did not depend on state patronage … up to a point.

The 1990s was the time when the RuNet, or Russian sector of the Internet, had started to emerge. In the beginning it represented, according to Gregory Asmolov, a Russian researcher of the RuNet, “a totally free space—to some extent even less regulated than the Western internet.” Of course, it has since developed into one of the most regulated and restricted Internet spaces. “State attempts to control the online sphere have materialized in various forms, including the regulation of data flows and the blocking of access to unfavorable online content and unruly platforms,” as Daria Gritsenko and her coauthors described the Russian Internet space in 2021.
Yandex.Taxi in Moscow, Russia, 2019. Source: Wiki Commons
Impartial or Biased?

However, the idea of the Russian internet (RuNet) as an alternative political and social space without any substantial control by the state is defined by Gregory Asmolov and Polina Kolozaridi as the base layer of RuNet’s development. Yandex’s founders were no exception. For a long time, they have claimed the “impartiality” of its algorithms and the company itself to be the cornerstone of their vision and philosophy. Just like the tech giants of Silicon Valley, Yandex’s founders were preaching the freedom and objectivity that algorithms free from human intervention should provide.

However, issues of algorithmic power, ideology, and bias are inseparable from search engines, and now digital platforms, not only in authoritarian countries, as Zadavski and Toefpl note in their research (2018) on Google and Yandex in the Russian context. As they have noted, although they did not find that Google’s and Yandex’s search results differ, neither of them returned non-dominant narratives (about Russian history, in the case of this research). This bias of both Google and Yandex, “appears to be rooted in the technology’s very ‘nature,’ that is, in the ways in which algorithms typically establish the relevance of websites.” (2019)

So up to a certain point in time, Yandex did have an algorithm similar to that of Google’s, which had not been influenced by the state (unlike, for instance, China’s Baidu, which had censored certain queries). Nevertheless, like all big search engines (Google included), Yandeх still favored the political elites (pro-government media conglomerates; encyclopedias, and the like).

Beneficiaries of the Algorithm

The same could be said about the news aggregator Yandex.News. While its developers proudly talked about “writing an algorithm themselves,” they also mentioned that they created a “rating of sources” which every week was re-counted. Two of the most important features of this algorithm, they continue, were speed of the news publishing and its citation rating. As one can imagine, even before the law on news aggregators was implemented, both were favoring large media outlets "large media" that are owned or controlled by the state, such as RIA Novosti, TASS, or Lenta.Ru.

The third criterion was even more peculiar, since it analyzed whether media had been aiming only for a top-five news page. In a way, Yandex, even when it could still do so, did not help Russian independent media sources, NGOs, or dissidents, hiding behind the proclaimed “impartiality” of its algorithms instead.

“Then in 2016 came the time when the authoritarian state started to dictate which sources to include and which to exclude in the aggregation process, thus cementing the pro-state sources as the main news on Yandex."
“This part of the story is hard to understand until you have worked at Yandex. You see, they believe in only one thing—objectivity, elevated to the absolute,” RBC quoted Aleхander Larianovskiy, who has worked as the director of Yandex for regional development for more than four years.

Yandex and the Kremlin’s Cybersecurity Concerns

Within the company, the atmosphere had also always been free and informal. Employers received benefits in the form of Yandex shares, the company was “hip” and democratic, and it was regarded as a privilege for both people from the IT sector as well as managers to be working there.

Over the decades, the Russian government had always paid close attention to what was happening to Russia’s most successful tech player. As early as in 1999, Volozh was one of the few representatives of RuNet who was invited to a meeting with Russia’s soon-to-be president, Vladimir Putin. Gritsenko, Wijermas, and Kopotev, in their introduction to The Palgrave Handbook of Digital Russia Studies, state that Putin promised the IT sector a decade of “free development.” The meetings continued through the years: with Dmitriy Medvedev in 2012, with Putin once again in 2014, and culminating with the Russian president’s visit to the platform’s offices in 2017. For the increasingly authoritarian Russian regime, controlling the Internet has become a question of regime survival. An idea of a “sovereign Internet” has been in the air since Putin called the world wide web a “CIA project” in 2014. Riding this wave of “cyberspace security,” state-owned Rostelecom, the largest provider of digital services in Russia, tried to create its own search engine, Sputnik, but failed, despite billions of dollars in investments.
“However, what the Russian government cannot create, it can usually take by force."
The role that Yandex’s search algorithms and news aggregator played in creating narratives around events and people had always been, perhaps reluctantly, political in nature. It was the role that the authoritarian state was willing to control, in one way or another. Lev Gershenzon, former head of the Yandex.News aggregator (from 2005–2012), said in an interview with Holod magazine, “You can't sit on two chairs, you can’t simultaneously live in Putin’s Russia according to Putin’s rules and at the same time be a ‘hip’ international company.”

The Kremlin Gets More Intrusive

Still, Yandex tried. In 2009, Sberbank (which is owned by the Russian government) was given a golden share in Yandex with 25% of the voting shares, and the platform had managed to avoid other shareholders deemed unwanted by the state, but the state gained an ability to influence Yandex’s decision-making, because the golden share “allows its holder to veto any sale of more than 25% of the company” (Toepfl and Zavadskyi 2019). In 2015, Yandex, with the help of Russia’s Federal Antimonopoly Service (FAS), had filed a lawsuit against Google to stop the company from pre-installing Google’s search engines on Android phones. The court ruled against Google, and Yandex shares rose on the news. After the appeal process, in 2017, Google agreed to give Android users in Russia the option of installing both Yandex and Mail.ru (another search engine, at that time closely connected to the government) on its Android systems.

Rumor had it that the Russian authorities discussed various ways to make Google obey, including slowing down its traffic in the country. Well before the full-scale crackdown on independent media sources, the latest step of which was taken in February 2022, access to information was regulated in Russia via the Netoscope project. Russian media watchdog and censor Roskomnadzor has been creating a list of unlawful sites on Netoscope, and Yandex, as well as several other Russian-based platforms, have participated by blocking the sites from search results.

“In 2017, the law on news aggregators forced them to use only registered media as news sources, raising concerns about indirect media control by the authoritarian state."
But an investigation by Meduza’s Svetlana Reiter says that as early as in 2016, Yandex News started to only use 15 “approved” (by the presidential administration) media sources in its aggregator, featuring the ‘top five’ news stories of the day. Meanwhile, the traffic from the digest of top-five news stories on the main page of Yandex’s search engine had always been enormous. Thus, these top-five news stories were effectively shaping the news agenda for Yandex users, and since 2016 no “unapproved” media has been able to make it into the top listings. In February 2022, according to Forbes, the daily audience for Yandex.News was 10.5 million people.
Yandex.Eda food delivery men in Moscow, 2019. Source: Wiki Commons
“Hybrid” Means of Exercising Direct Control

In 2021, the prior successful court case against Google backfired: the Federal Antimonopoly Service had filed another case, this time against Yandex. Yet the platform not only managed to close the case ahead of court hearings, but also announced that from January 2022 onward, Yandex software and apps would be pre-installed on all computers, tablets, and mobile phones sold in Russia. This would have been impossible without the government’s enforcement, and this would have meant another financially successful year for Yandex—if it were not for the Russian invasion in Ukraine.

The Russian war on Ukraine made visible all the hidden agreements between Yandex and the government, and its hybrid means of exercising direct control.
“While the last independent media and Western social networks were blocked, the reality of Yandex Search and Yandex News cooperating with the Russian propaganda machine became obvious."
Volozh was sanctioned by the European Union and had to leave the company (at least officially); the next director, Tigran Khudaverdyan, was immediately sanctioned, too. According to RBC, Yandex might declare default on its obligations: it has problems, both with car leasing for its car-sharing service, as well as with its Taxi apps in Estonia and Latvia. In her article, Reiter claims that thousands of Yandex employees have left the company, fleeing abroad. This includes top managers of Yandex: the head of cloud and news services; the manager of the retail division; the head of the blogging service; the head of Navigation service, and former general manager Elena Bunina.

Gregory Asmolov, a well-known researcher of the history of RuNet, told me that he thinks the break-up of Yandex is inevitable: “In my opinion, the history of Yandex is about its ‘genetic code’ of the early RuNet. So, when the [autocratic] state became stronger, Yandex still did not integrate fully to the internal isolated state system. And since it failed to fully integrate, Yandex is now breaking up. Some parts of it will keep developing in Israel. Some will be sold. Some will continue fighting for its niche in Russia. But the break-up of Yandex is unavoidable, in contrast with other Russian-based platforms, such as Mail.ru or Sberbank.”
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