Sources say tech giant Yandex to sell News and Zen services

Sources say tech giant Yandex to sell News and Zen services
Yandex boasts a range of intelligent tech products and services, but sources say that it is planning to sell off its media platforms. / Image: Yandex company.
By Theo Normanton in Moscow March 16, 2022

Tech major Yandex is mulling the sale of its media platforms and Yandex.zen to Russian internet company VK, according to sources close to the negotiations. The move away from media would help the company out of a bind between the competing demands of Russian regulation and international stakeholders.

Yandex is a heavily diversified technology player listed on both America’s Nasdaq and Russia’s MOEX. In addition to the world’s fifth largest search engine, Yandex has built a host of other intelligent products and services: from taxi and carsharing apps to autonomous delivery robots. Also in the company’s portfolio are news aggregator and personal recommendations service Yandex.zen.

In recent years, these services have come under increasing scrutiny from Russian regulators and lawmakers. In August 2019, deputies from Russia’s lower chamber of parliament raised questions over how selects its top stories, suggesting that the service “intentionally exacerbates socio-political situations”. The company has repeatedly stated that its top news is chosen by an algorithm, not by employees.

As part of a raft of new legislation introduced since Russia’s invasion of Ukraine, and other Russian news aggregators are obliged to only feature publications officially listed on the national media watchdog’s register.

Meanwhile, multinational companies are exiting Russia in droves as pressure grows on big market players to boycott the Russian economy. Caught in the crossfire between these two contradictory demands, reports by RBC that Yandex has entered discussions to sell and Yandex.zen come as little surprise. The sale of its media platforms would allow Yandex to simultaneously exit this double bind and focus on the consolidation of its other tech assets.

The top contender for a takeover of and Yandex.zen is social media and internet group VK. Since the start of the war, VK has taken the opposite approach to Yandex, focusing on the expansion of its Russian messaging and media services to fill the gap left by western companies. Vedomosti reported on Tuesday that VK is hoping to launch a new corporate messaging service and relaunch messaging platform ICQ.

In contrast, VK has closed down its taxi aggregator service Citymobil. This forms part of a trend in the Russian IT market of shedding non-core assets and focusing on consolidation of verticals with strong growth potential. VK appears to see the greatest potential for gains in its media and social media platforms.

Yandex is also hoping to boost the monetisation of its existing technologies through consolidation and international expansion, as reported by bne IntelliNews. In-house technologies like delivery robots, routing and database management systems could all be deployed abroad in greater quantities. Yandex’s ride-hailing app already has a presence in over 20 countries. The sale of Yandex’s news services is consistent with this strategy of doubling down on vertical international expansion.

A source reportedly told RBC that “Yandex wants to be a technology company, whereas Yandex.zen is developing more in the direction of a social network.” is an aggregator of news materials, with over 10 million daily visitors. It was launched in 2000. Yandex.zen is more recent – dating to 2017. It’s a personal recommendations service with a publishing platform which allows users to post texts and earn money through advertising. Yandex.zen’s machine learning technology adjusts to the user’s interests and recommends new posts in line with their preferences. Yandex.zen had over 22 million active users a day in 2021.

A source close to the discussions confirmed to bne IntelliNews that Yandex has entered negotiations with VK for the sale of its news services. In fact, the source said, the decision to try to divest was taken last December and Yandex has been exploring options since then. Yandex declined to comment on the alleged deal.