Yandex NV (YNDX): What’s Holding Back This Search Giant?

In response, Facebook cut Yandex off from its Graph API, the platform which connects third party software to Facebook. Facebook likely considered Wonder to be a competitor to its recently released “Graph Search,” which operates on a similar principle, allowing users and advertisers to intelligently search through a directory of users based on location, age, interests and more.

Despite the setback, Yandex claims that it is working on partnerships with other social networks. However, without Facebook, any mobile social networking initiative would be wasteful and pointless.
Despite the ongoing threats of Google and Facebook within Russia, Yandex has set its eyes on overseas expansion. The company recently announced that it had established a 2% market share in Turkey, which is often considered a key emerging market since it bridges the gap between Eastern and Western trade while controlling several key oil pipelines.

Although its share is currently small, the company believes it can secure 25% to 30% of the market in the long term. Yandex’s CEO Arkady Volozh believes that despite Google’s dominance of Turkey, there is room for “three orbital” companies in any nation’s search market – with the largest taking 60%, the second taking 30% and the last one (and other fragmented competitors) claiming 10%.

Yandex has also released its own web browser, just as Google released Chrome to lock users into its cloud-based ecosystem. Although Yandex currently lacks Google’s sprawling ecosystem of apps, it recently forged a partnership with photo-sharing app producer Cooliris, which is similar to Google’s Picasa software. Unlike Picasa, however, Cooliris is able to download and organize pictures from a myriad of online sources, such as Facebook, Instagram, Google+,Picasa, Flickr and more. Yandex also has its own cloud drive service, Yandex Disk, which resembles a fledgling version of Google Drive or Microsoft’s Skydrive.

Even though Russia’s Internet market hasn’t matured yet, with a 44% penetration rate compared to 79% in the United States, Google’s growing slice of the market is too hard to ignore. Whereas Baidu’s market share soared after Google’s expulsion from mainland China, Yandex has no such catalyst on the horizon. In addition to Google’s rising popularity, Yandex also must contend with Facebook, which is a dangerous wild card due to its rivalry with Google and its new Graph Search technology.

Considering these glaring vulnerabilities, as well as Yandex’s fairly weak and costly growth initiatives, I would say that the “Russian Google” is on the fast track to becoming the “Russian Yahoo! Inc. (NASDAQ:YHOO)” – unless it can mount a reasonable, timely defense against its American rivals.

The article What’s Holding Back This Search Giant? originally appeared on Fool.com and is written by Leo Sun.

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