Comment by Inform Napalm, on Facebook:
In this small investigation we are going to prove the following three claims:
1.#Yandex is fully controlled by the #Kremlin.
2.Yandex Group is engaged in a very expensive and economically unreasonable expansion in Ukraine.
3.Yandex expansion in #Ukraine is the biggest threat to the national security, even compared to the presence of the Russian social networks.
Hybrid Wars: Yandex’s Hidden Threat (Infographic)
In a hybrid war, any lull is temporary. In a hybrid war, the instigators never announce their aggression and attack suddenly, from unexpected points, in the first place trying to crush the enemy’s morale – this is why it is called hybrid. Defeated in the first battle and retreating on most of the fronts, Russia is still hoping to conquer Ukraine. And this objective still looks doable – while Ukraine has made headway in terms of energy (gas, coal, nuclear fuel) and technological independence, in the field of informational and political security setbacks come one after the other.
The squabble between the Kremlin towers ending in the effective decommissioning of the Humpty-Dumpty project revealed to the public and policymakers the fact long known to the professionals – all the Russian IT majors are closely connected with the Federal Security Service. Yet again the issue of VKontakte, Odnoklassniki, Mail.ru Holding and a number of other Russian services extensively used by Ukrainians came into the spotlight.
The standing of Mail.ru has been clear for a long time. The beneficial owner of Mail.ru Group is Alisher Usmanov, Putin’s loyal friend and treasurer , whom he personally awarded with the For Beneficence decoration. The role of Mail.ru in Ukraine has been the topic of discussion for quite some time, and sooner or later it was bound to end in a ban.
However, there is another agent of Russian influence in Ukraine right next to this infamous holding which is no less dangerous and sometimes even more so. It is hardly ever mentioned, and this is exactly why it is more dangerous. We are talking about a kraken with enormous resources which are obscure to us and fully controlled by the Russian government. Its tentacles reach all areas of one’s Internet activity, from e-mailing to payments, entertainment and logistics, simultaneously promoting Russian values and pushing individual Ukrainians and mass media outlets into Russia’s bear hug. The name of this kraken is Yandex. In this small investigation we are going to prove the following three claims:
- Yandex is fully controlled by the Kremlin.
- Yandex Group is engaged in a very expensive and economically unreasonable expansion in Ukraine.
- Yandex expansion in Ukraine is the biggest threat to the national security, even compared to the presence of the Russian social networks.
We apologize for a large number of links to Russian sources.
1.Yandex is Putin’s business
Let’s start with the easy part. It does not take a conspiracy theorist to see Yandex’s full dependency on the Kremlin. Public sources contain enough eloquent information.
Russian Yandex is a limited liability company fully owned by the joint-stock company Yandex N.V. (the Netherlands). The Dutch company has two types of shares – A and B. The B-type shares give 10 times more votes and are the tool of effective control over the company. This system intended to protect the company from hostile takeover attempts was developed by Yandex founders, Arkady Volozh and Ilya Segalovich, when Yandex saw the Russian government with its charming night robber’s manners as its biggest threat.
A lot has changed since then. Today, Yandex is an amazingly wealthy company with the Russian government as its principal owner and the holder of the golden share. In 2009, Yandex sold one golden share to the state-owned Sberbank of Russia for 1 euro. This share gives broad control over the company’s shareholdings. Since August, 2009, any shareholder who acquired more than 25% of the company’s authorized share capital or votes must request Sberbank’s approval for holding such stake. Thus, an uncooperative shareholder daring to challenge the official policies will not be able even to exit by selling the shares to somebody else, but will be forced to bend the knee or end up like Voronenkov (Ed.: an ex-MP from Russia who defected to Ukraine and was assassinated in Kyiv).
The main important component of the Yandex infrastructure is the Yandex.Money service. Again, 75% of this payment service is owned by the same Sberbank of Russia. It does not operate in Ukraine, however. But not because Yandex does not want to – it has been blocked by the National Bank of Ukraine.
If together with these two influence tools, we put into the picture the FSB which is omnipotent in Russia, we will get a corporation fully controlled by the Kremlin in key matters. Actions speak louder than words – the tougher the going gets in Russia, the closer Yandex is leaning towards the Kremlin. This March, the whole Russia witnessed rallies against Medvedev and the government in general convened by the opposition leader Alexey Navalny. The security services managed to hush the event in the printed media. But, the Internet burst with amateur coverage. Yandex responded to the events with a blackout. The news about the rallies never made it to the search results while the latest addresses by Putin and his associates, as well as reports about rich crops and good weather, received extensive coverage.
Yandex found itself the target of serious criticism by Russian opposition, and the company’s response sounded rather lame. However, everything is quite clear as it is. Especially in view of the fact that in January, 2017, Yandex’s financial arm started blocking opposition members’ e-wallets at its own discretion. And here Navalny’s role in the Kremlin’s scenario is of little relevance. In any case, Yandex has now the only role – to announce “Dinner is served”.
2.Yandex spares no expenses to infiltrate Ukraine
The system with which Yandex can beat the more technologically advanced Google and squeeze it out if the country rests not even on three pillars but on only two – political protection (in China, where Google is suppressed, they develop Baidoo, in Russia, the Kremlin’s anti-Western efforts carved a large niche for Yandex) and, most importantly, a great number of “auxiliary services” (Mail, Navigator, Maps, Money, Jobs, News, Browser) pushing the user into a walled garden of Yandex infrastructure. After getting firm hold of the user, Yandex makes its major profit from its Money, Market and Direct services.
Yandex managers, in the spirit of typical Russians chutzpah, recently declared that they were ready to steal Google’s market share in any country. Cool, but not really true. The thing is that Yandex cannot enter any country. It is a very expensive endeavor to surround a foreign citizen with a network of services. However, penetrating Ukraine is coming slightly cheaper for Yandex – there are enough Russian-speaking people and, traditionally, despite Google’s domination, the share of Yandex as a search engine had been higher than one-third before the war. Has something changed after the war began? Nothing. Yandex has not suffered any repressions and is feeling just fine. Moreover, since 2016, it has been very active in capturing the Ukrainian market.
It started last summer when Yandex surreptitiously sneaked into Facebook and started expanding its Overton window by pushing its numerous advantages and boasting development plans for Ukraine. It turned out that Ukrainians could tolerate it somehow, while some of them even liked it. After it had expanded its window enough, Yandex used it to push through a new taxi service posting its logos in the Ukrainian cities. It created interesting partnership offers for mass media. Yandex.Direct intensified customer search. Outdoor advertising appeared.
Total Yandex expenses on its expansion into Ukraine are estimated in dozens of millions US dollars. In its taxi service only, Yandex now pays the drivers UAH 20 or more as compensation for each journey (this subsidy alone exceeds the profit) and spares no money for marketing. Yandex expenditure budget for such campaigns must be over a hundred million hryvnyas.
Where does this money come from? Imagine that Yandex owners were businessmen seeking a business case and trying to manage risks carefully. There is Russia’s aggression against Ukraine. Ukraine responds accordingly – with sanctions and office raids. Any minute, the business in Ukraine can be shut down by the local authorities. Any minute, Putin can start a hot war. In Russia, the law enforcement agencies can start persecuting the company for doing business in an enemy state. The investments in Ukraine are under extremely high risk in any of these scenarios. Success is EXTREMELY UNLIKELY. But what do the Yandex managers do? They invest millions in developing their business in Ukraine. In Russia, there can be only one situation when a business is so careless about the money. It’s when the money comes from the government.
- Why is Yandex interested in Ukraine?
Yandex is very good at pretending to be a “politically independent organization”. It is as good in this as are many “members of the Russian opposition” when they pretend to be “supporters of Ukraine”. Now Yandex managers claim that it is “an independent transnational company”. However, their rhetoric used to be totally different. Yandex founder Ilya Segalovich made an absolutely clear statement: “Yandex is a Russian company. And offering services in the Ukrainian language is a war ruse”. We have already quoted a Yandex developer saying: “We are ready to capture any country, however, it is not necessary right now”. But why then are Ukrainians so special? Why is it necessary to capture this market? Here is the explanation.
Yandex has all sorts of possibilities to softly influence Ukraine.
Search results manipulation. For millions of Yandex readers, it shows five news at the top. Just five. They determine the country agenda, they represent the most important things. What are now the most important things for Ukrainians according to Yandex? Let’s see:
Kyiv News April 26, Wednesday, 00:18
Russian city flooded with juice following a factory disaster
Responsibility claimed for the terrorist attack in St. Petersburg
Security Service of Ukraine initiated a criminal case against foreign politicians
Scandal in Kyiv about the “Holocaust-Cabaret” sign
Putin wants to start military cooperation with Ukraine
OK, this must be some mistake. Putin’s false advances, juice flood in Russia, Holocaust scandals in Kyiv, the terrorist attack in St. Petersburg – can these really be the most important news for Ukrainians? Maybe, the problem is that we were searching in the Russian language? Let’s switch to Ukrainian.
Kyiv News April 26, Wednesday, 00:20
Security Service of Ukraine initiated a criminal case against foreign politicians
Streets are flooded with tons of juice following a factory disaster in Russia
Now we know who is behind the explosions in the Russian subway
Putin announced willingness to resume military-technical cooperation with Ukraine: It is essential to create the proper conditions
In Kyiv, the sign “Holocaust Cabaret” located opposite the synagogue was taken down
So it is intentional. The news Yandex is feeding to Ukrainians is a set deliberately and professionally filtered through the Russian propaganda machine. Since its audience is about one-third of the country (see the infographic), the reach is wider than of any TV channel. At the same time, Russian TV channels are being banned in Ukraine while Yandex is not.
Another interesting thing which Yandex can do for the Russian government is its invaluable help in espionage. Today, many Ukrainians believe that Yandex has great Maps and Navigator services. In addition, it has an equally great Mail service, all linked together with monitoring of search queries and matching them to the user’s account. This is how it happens that an elderly lady, Oksana Ivanenko, recently wrote to her brother telling him how her son was serving in the Ukrainian Army (“such a folly”) and where he was assigned and what he was doing there and who his companions were. Also we can see a government official, Fedir Petrenko, looking up Ulysse Nardin watches, making multiple searches related to military equipment and often visiting Ukroboronprom (Ukrainian state-owned defense conglomerate). We can see a lot of different things if we are Yandex in Ukraine. And we pass them on.
This is far better than VKontakte or Odnoklassniki with their scraps of photos, geolocations mixed together with some gibberish text. This thing is very much like the Dark Lord’s all-seeing eye. And the feeble ban for the use of non-Ukrainian mail servers (only to government officials! and only for job-related correspondence!) issued by the Ukrainian government in 2015, is not going to make a lot of difference. If only because the most interesting things are in private correspondence, geotargeting and search statistics.
And finally: Yandex is not only doing all this in Ukraine. It also makes money and engages Ukrainian businessmen and media into its system. Yandex.Direct, an intermediary between the advertising customer and Internet media, is the main source of the company revenue. Besides, the search engine can include news into its results and enter into agreements with media. Yandex has already hooked the media on package cooperation deals, just like Ukr.Net used to do in its own time. Certain most patriotic Ukrainian mass media receive up to 20% views from Yandex! Then they run Ukrainian customers’ advertizing, and the money again goes to Yandex. Ukrainian money. Part of it is spent on arms for the terrorists in Donbas. We are not exaggerating now, as Yandex and its shareholders must pay taxes in Russia.
The prospects are rather gloomy. Yandex’s further expansion in Ukraine should be regarded as nothing else but a time bomb. In an opportune moment, it will be able to either stir the crowds (“Away with the Junta! The people want to be friends with Russia!”) or dampen down the protest wave (“Calm down, if the government makes pro-Russian actions, it’s all right”). And in-between, it will be creating the informational background advantageous for Putin, spy and make more money.
It is not so easy to stop this process. Ukraine has no own regulator with sweeping powers like Roscomnadzor (Russian Federal Service for Supervision in the Sphere of Telecom, Information Technologies and Mass Communications), so it cannot block applications, Internet search engines, browser use etc. The only thing which can thwart Yandex’s plans is putting it on the sanction list. If Yandex is unable to trade in Ukraine and engage Ukrainian companies and citizens (run advertising, advertise itself, hire people…), if its office is frequently visited by the law enforcement agencies of all sorts, if it is ridiculed by the civil society, all this will make the expansion too expensive, even for Putin.
The publication has been prepared by Andrii Lysovskyi and Mykhailo Makaruk especially for the international intelligence community InformNapalm.
Translated by InformNapalm English