Yandex exits the news aggregating business in Russia

Yandex exits the news aggregating business in Russia
/ Image: bne IntelliNews
By Theo Normanton in London August 23, 2022

Tech major Yandex has closed a deal to sell its Russian media platforms and Yandex.zen to internet company VK. The deal will allow Yandex to exit the Russian news aggregation sector, which was presenting the company with problems at home and abroad.

According to a press release on Yandex’s website, the company has entered into a binding agreement to sell its news aggregation platform and its infotainment service Yandex.zen to VK. “As sole consideration for these assets, Yandex LLC will acquire 100% of the food delivery service Delivery Club,” the statement added.

As part of the deal, Yandex’s existing main page – which showed users selected news stories from News and personal recommendations from Zen – will be renamed and transferred to VK, along with the associated brands and technologies.

Yandex will make its main page, as well as developing a new app for Android called Yandex with Alice. Both the new main page and the Android app will be structured around Yandex’s search engine.


Good news?

The News and Zen platforms had been something of a thorn in Yandex’s side for the last year. The former is an aggregator of news materials which receives over 10mn daily visitors. The latter is a TikTok style personal recommendations platform that uses machine learning technology to present a user with suggested posts. Yandex.zen had over 22mn active users a day in 2021.

Due to their scale, the two services were coming under increasing scrutiny both from Russian legislators and foreign stakeholders.

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. In complying with this law, Yandex came under fire for giving a platform to pro-war voices.

Yandex’s exit from the news sector will therefore likely come as a relief to the company, allowing it to exit the unenviable double bind of Russian and international pressure.

“This deal wasn’t about short-term profits,” a source in the industry told bne IntelliNews. “It was part of an important strategic decision taken by the board and management shortly after the war started to exit the news aggregation business completely in light of new regulation.”


A new tech trend

In return for its news assets, Yandex will acquire Delivery Club, Russia’s leading food and grocery delivery service. Delivery Club couriers will join the Yandex Pro technology platform, but Yandex hopes to maintain the Delivery Club brand rather than merging it with its own ultrafast delivery service Yandex Eats.

“The interests of the company’s stakeholders … are best served by pursuing the strategic exit from its media businesses (other than entertainment streaming) and continuing to focus on other technologies and services, including search, advertising, online-to-offline transactional businesses and a number of B2B technology businesses,” Yandex said in its announcement.

This marks a trend in the Russian tech sector for shedding non-core assets and consolidating in sectors where a company already has a foothold and assesses that further growth is possible.

Both VK and Yandex are traditionally heavily diversified tech companies, but they have been developing in opposite directions since the start of the war in February. VK is focusing on the expansion of its Russian media services to fill the gap left by Western companies, and is in the process of selling its taxi aggregator service Citymobil.

Yandex, on the other hand, is hoping to boost the monetisation of its proprietary technologies such as delivery robots, routing systems, and ride-hailing platforms through consolidation and international expansion, as reported by bne IntelliNews.

The transaction is subject to anti-monopoly approval in Russia and is expected to close in the coming months.