January 13, 2011
Not much is known about Russia’s technology scene or ‘Runet’, the term used to describe the Russian language internet, and yet it’s keeping pace with Silicon Valley, finds Emma Barnett.
Last month I visited Moscow to help chair the country’s first English speaking technology conference ( TechCrunch Moscow ) and was pleasantly surprised to discover a very self-contained and self-sufficient industry.
The US technology giants, such as Google and Facebook, have a presence in the country, but unlike the majority of territories they have entered around the world, they have failed to dominate; Russian companies reign across search, social networking, digital media and email services.
Yandex, a Russian company founded in 1997, is the country’s most popular search engine, with 64 per cent market share, while Google lags behind in second place – a position the search king is not used to occupying outside of China.
But Yandex, like Google, has not just limited itself to providing speedy and relevant search results. It also provides Yandex Maps, Yandex Money (an e-payments system) and Yandex Photos. The list continues, but it has also come up with digital services bespoke for Russia’s needs, such as a phone app which shows where the traffic jams are occurring throughout the intensely congested streets of Moscow and beyond. In every taxi I took, before I decided to abandon the traffic and take to the beautiful underground system, the driver was held mesmerised by a combination of Yandex Maps and the Yandex traffic app.
Russia’s most popular email service and portal is Mail.ru, the Russian company most recently thrust into the spotlight after it floated on the London stock exchange with an approximate valuation of six billion dollars. The group, majority owned by Digital Sky Technologies, has also received a lot of international press due to its largest shareholder's recent increased investment in Facebook of $50 million, and for its high profile investments in other hot digital properties such as the social gaming company, Zynga , responsible for popular games such as Farmville and most recently in Groupon, a popular group buying site.
Facebook is not even the most popular social network in Russia, despite its phenomenal global growth. Instead, Russians flock to Mail.ru-owned MoiMir (MyWorld) or vKontakte, which Mail.Ru also owns a 25 per cent stake in.
A similar pattern emerges with the consumption of blogs and digital media. SUP, a Russian online media company, is the parent of the some the country’s most popular sites: Gazeta.ru, Russia’s answer to the US internet newspaper – The Huffington Post, Championat.ru, the country’s most popular sports news site and LiveJournal.com, a blogging network.
So why can’t the US or any other country’s technology services steal the crowns of the equivalent Russian services?
Arkady Volozh, Yandex’s chief executive, thinks there are two reasons: “The language barrier is a big reason and lots of US companies are still playing catch up in this area. And there is the bigger reason – Russian technology is just as good, if not better than a lot of similar US companies.
Yandex has been able to keep ahead of Google because of the quality of its search and other key services. People will only leave a service if the quality starts dropping. In Russia, we have strong technological capabilities which shouldn’t be undermined,” he explains.
This proven capability, coupled with the construction of Skolkovo , a large technology park currently being built in Moscow's suburbs, with the full backing of Russia’s President Medvedev, certainly makes David Cameron’s Silicon Roundabout in London’s Shoreditch look a little meek in its bid to steal California’s tech crown.
However, the most interesting revelation of my trip was that none of the major Russian technology companies have any ambition for the foreseeable future to expand internationally. With only a third of Russia’s huge population online, Russian technology chiefs are understandably still excited about potential growth on home soil.
From an outsider’s point of view, it is incredibly striking how Russia’s developers look out and learn from the rest of the world’s progress in areas like social networking and search, while very few technology companies in the West seem to be looking in and paying attention to the impressive innovations happening right across Runet.