Can Yandex Help Facebook in Russia?

Facebook agreed to give Yandex access to its data firehose with hopes of increasing traffic.

Jan 15, 2014 at 12:00PM

Facebook (NASDAQ:FB) is finally playing nice with Russian search company Yandex (NASDAQ:YNDX) after the social network company blocked the latter's social search app, Wonder, last year. Yandex is bigger than Google (NASDAQ:GOOGL) in Russia, commanding over 60% of the market.

On Tuesday, the two companies announced an agreement to incorporate Facebook's public data into Yandex's search results. The move is mutually beneficial, and should help Facebook improve its traction in Russia.

Facebook in Russia
Facebook faces tough competition in Russia. It's even gone so far as mentioning its competition by name in its 10-K: vKontakte and Odnoklassniki. vKontakte attracts the bulk of Russia's social media users with additional features like file sharing.

Russia, one of the BRIC countries, is an important market for web companies. Its 72 million Internet users is bigger than any other European country. Its growth rate is the second fastest in the region after Italy.

Facebook was just the 12th most visited site in the country at the end of 2012. Google took third, but still trails Yandex. Alexa ranks both, the home of vKontakte, and ahead of Facebook in its most recent rankings.

The deal with Yandex should help, as the country's most popular website should funnel more users to the American social network. Facebook will now be better represented in Yandex's blog search -- which indexes blogs, microblogs, and social networks -- and the plan is for Yandex to eventually incorporate Facebook data into its main search results as well.

Note, this doesn't give Facebook an advantage over its rivals. It simply puts it on the same playing field, as Yandex already gathers data from and Twitter. As Facebook continually improves its product, and vKontakte faces legal pressure due to its file-sharing capabilities, the added exposure should help attract new users.

Yandex's product gets better
As I mentioned previously, Yandex already has a lead over Google in Russia's rapidly growing web search market. The local company has over 60% of the market, whereas Google takes just 26%.

This deal with Facebook is indicative of a major way Yandex differentiates itself from the global search giant. As Yandex points out in a blog post regarding the agreement, the company doesn't "compete with anybody in the sphere of social networks; instead [it] seek[s] to collaborate with all the players."

Google, on the other hand, is practically a direct competitor with Facebook with Google Plus and its ad network. The two companies held a long detente over Google's ad network playing nicely with Facebook's ad exchange. Additionally, it's expected that Facebook will compete directly with Google's ad network with an external ad service of its own. Twitter already has such a product.

Google may have a bias against sending traffic to other social networks over its own, but Yandex doesn't care. Facebook data will help Yandex create a better product by producing more accurate and relevant search results, while Google neglects Facebook and Twitter.

As more people use social networks to share important news and interest pieces, Yandex is becoming a central hub for all of that information, and is creating technology to organize it and allow easy access.

The company blog points out that Yandex could:

allow a user to find an old friend without having to register on every single social network one after another. It would also allow a user to tap in to all the discussions of some interesting event all together in one place

The addition of the world's most popular social network will help achieve this goal.

Emerging a winner
Emerging markets like Russia are a great place to find growth companies like Yandex, but represent opportunities for established companies like Facebook as well. The deal with Yandex is just one of several agreements Facebook has made with local companies outside of the U.S.

Facebook has made numerous deals with foreign wireless carriers to allow subscribers easier access to its site. These deals are generally mutually beneficial providing the local company with an advantage and Facebook with more traffic.

All social-media investors should know this company
Opportunities to get wealthy from a single investment don't come around often, but they do exist, and our chief technology officer believes he's found one. In this free report, Jeremy Phillips shares the single company that he believes could transform not only your portfolio, but your entire life. To learn the identity of this stock for free and see why Jeremy is putting more than $100,000 of his own money into it, all you have to do is click here now.

Adam Levy has no position in any stocks mentioned. The Motley Fool recommends Facebook, Google, and Yandex. The Motley Fool owns shares of Facebook and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information