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Alibaba Puts Yandex on Notice

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Jun. 27 2019, Updated 11:23 a.m. ET

Alibaba escalates competition with Yandex

Alibaba’s (BABA) e-commerce joint venture with Russian entities MegaFon, Mail.ru Group, and Russian sovereign wealth fund RDIF escalates its rivalry with Russia’s top Internet services company (YNDX). Yandex’s main business is providing Internet search services, but it has also diversified into fields such as ride-hailing and e-commerce. Yandex recently partnered with Alibaba’s domestic rival JD.com (JD) on an e-commerce program in Russia, according to a report from the Moscow Times.

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In addition to forming a joint venture to tackle Yandex in the Russian e-commerce market, Alibaba is also now backing one of Yandex’s fiercest challengers in Russia’s digital services market. Alibaba bought a 10% stake in Mail.ru from MegaFon, according to a report from Russian news agency Tass. Mail.ru is one of Yandex’s domestic competitors in the digital advertising market.

Mail.ru behind one of Russia’s top social media services

Mail.ru held a 2.2% share of the Internet search market in Russia in May compared to Yandex’s 50.4% share and Google’s (GOOGL) 46.1% share, according to data from StatCounter. Although Mail.ru is subdued by Yandex in the Russian Internet search market, it’s one of the leaders in Russia’s social media market. It had a 22.6% share in the market in May, coming in second only to YouTube at 23.7%, according to StatCounter. Facebook (FB) and Twitter (TWTR) held 20.9% and 11.8% shares of Russia’s social media market, respectively, in May.

The partnership with Alibaba on e-commerce could help bring more traffic to the digital platforms operated by Mail.ru, thereby boosting its appeal as a digital advertising provider in a challenge to Yandex.

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