The Interview Issue

Arkady Volozh on Yandex's Challenge to Google


"We had almost no regulation. It was good, and it was bad"

Photo illustration by Francesco Nazardo for Bloomberg Businessweek

"We had almost no regulation. It was good, and it was bad"

Yandex has more than 60 percent of the search market in Russia. Volozh talks with Carol Matlack about using his country’s deep pool of tech talent to probe Google’s (GOOG) vulnerabilities as the company moves into foreign markets.

Talk about Yandex’s expansion plans outside Russia.
Russia accounts for maybe 2 percent or 3 percent of the global Internet market. It’s growing, but it’s not even 10 percent. So we need to apply a lot of effort, almost as much effort as any international player does, but we apply it only for one small market. We realized that the experience we have here and the technologies we have could be applied elsewhere. Expanding into Turkey last year was the first time we tried to approach a real foreign market.

How are you differentiating yourself?
Our machine-learning techniques, which allow us to segment audiences by small geographies. We started showing different search results in different small towns because we know where the query comes from, and for 20 percent or 30 percent of all search queries, the result needs to be different for different areas. This year we are developing what we call social context search or social search. We are partnering with all the social networks available here in Russia and in the Turkish space. We use this information to provide better search results for some classes of queries.

With Google trying to expand, is it going to be harder for you to hold market share?
In principle, yes. Browsers offer now one of the important distribution tools for all the services, including search. Defaulting the browsers could influence the users’ preferences. They can’t change them completely, but they could influence them several percent, and with that several percent anything could get started.

What is Yandex looking for in acquisitions?
We have two kinds of acquisitions. One is when we want to get acquainted with a field or help support some field—it is more about our work with startups. Another channel of acquisition is businesslike. With all this platform optimization, we need to have our own footprint in mobile phones. Last year we bought a software manufacturer for mobile phones. We’re now able to launch our own Android-like systems with Yandex cloud services built in.

What are some of the most influential tools Yandex has developed?
Everybody here now uses Yandex Traffic Jams. When you travel around Moscow, you can see almost every car is using a smartphone where they can see what’s ahead of them. It’s a very exciting thing which didn’t exist before we launched it.

Are there companies you really admire and try to recreate in Yandex?
I think Yandex is something in between two different cultures. One originated from the old Soviet culture of the scientific institute. It was a free atmosphere of scientists, maybe too free because nobody cared about making money. Another origin is something close to what you usually see in California startups. Of course, today we need not just to produce technology, but it must be products which are monetizable, that could really change peoples’ lives.

Is it much harder to run a search business in Russia than it would be in another country?
In terms of regulation, the Russian Internet for the last 10 or 15 years has been the most open and free segment of the Internet anywhere. We had almost no regulation. It was good, and it was bad. There are two kinds of problems which we encountered. One is businesslike problems like copyright, and the other is public protection, child porn and all that. With no regulation at all, it’s very hard to deal with copyright issues, for example, and we would like to have some kind of regulation. And also with the publicly dangerous content, some of which is explicitly dangerous and some much more questionable. That’s why some regulation is needed here. The problem with recent initiatives is that there is no difference between the explicit content, which is illegal by all the laws, and the content which just somebody doesn’t like.

What’s in store for Russian tech?
Russia has to have a technology company of global meaning sooner or later. We should take the depth of technical culture we have here and make it available worldwide.

Matlack is a Paris correspondent for Bloomberg Businessweek.

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