The screenshot shows how efficiently Yandex is adding its services to the top of the SERP
Hello! I am one of those lawyers who sent an appeal to the Federal Antimonopoly Service, which resulted in a " warning about the termination of actions (inaction), which contain signs of violation of antimonopoly legislation ."
You may have already seen a wave of news about the fact that the FAS initiated a case against Yandex and immediately there was a sharp jump in shares, as a result of which the company lostper hour of trading 106 billion rubles of market capitalization. I'm pretty sure that the big headlines and the speculative nature of the stock market played a role here, rather than the detailed content of the news and its essence. That is, it is rather a speculative fall.
It is the detailed content that I want to analyze now.
So, in the previous series: FAS issued a warning that it is necessary to eliminate signs of violation of antimonopoly legislation. This means that Yandex is no longer seen as a private company with its own product, and search is no longer their own business, but, as defined in the warning, is a search market. The market is the key word, because it is the creation and regulation of a level playing field in the markets that the antimonopoly service deals with.
A month has passed, and the situation looks like Yandex did not fix anything, but instead chose a strategy of wasting time, by submitting a petition to extend the warning period by 1 month on April 1. It seems that the FAS did not appreciate such a move, and initiated an administrative case, as, in fact, they indicated in the warning.
Important note
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Chronicle of major events
2019 : several large companies, founded at the dawn of Runet and suffering from Yandex's actions in search, unite into an alliance (which journalists later called the IT coalition) in order to develop both legal and technological solutions that allow the market to develop in conditions of fair competition ...
2020 : The IT coalition understands that regulatory regulation of the search market is necessary, and asks the FAS with a substantive question: is it normal that Yandex is turning into the best search engine for Yandex services. Here my colleague gives public examples that Yandex services receive 20% more traffic, which is taken from market participants using discriminatory (from our point of view) methods.
2021 year: FAS is considering the materials of the coalition and officially issues a warning to Yandex at the end of February, indicating two important things: the presence of a search market and indicating signs of violation of antimonopoly legislation
"Expressed in the creation on the market for the provision of general search services in the information and telecommunications network" Internet "with the use of information technologies of unequal (discriminatory) conditions by providing for services persons, a group of persons LLC" Yandex "(including LLC" Yandex.Vertical " , LLC "Yandex.Market", LLC "Yandex.Mediaservices", LLC "Kinopoisk") "
Given the rather interesting legal nature of the "FAS warning", Yandex, in fact, receives an offer to voluntarily eliminate the signs of a violation or go to the stage of proceedings within the framework of the initiated case. That is, the FAS has not yet given a legal assessment of whether there is a violation, the FAS only said: it looks like there are violations. And she offered to stop doing that. No sanctions or specific regulations. If Yandex voluntarily went to the warning scenario, then the plot would end there until the next episode of discrimination, roughly speaking.
Here I go into detail about this document and its impact on the industry.
End of March 2021: Yandex is inactive and does not fix anything, publicly stating that it does not see any violations in its actions, moreover, that the company has already partially fulfilled the requirements from the warning. FAS is silent. "Sorcerers" work to the fullest.
April 1, 2021 : Yandex submits a petition to the Federal Antimonopoly Service to extend the warning by 1 month.
April 13, 2021 : FAS announces the initiation of a case against Yandex.
What does this mean and what will happen now?
The warning was not a document that must be followed: in fact, it was a proposal to voluntarily eliminate the violation (more precisely, signs of a violation) or try to prove in court that there were no violations and the FAS claims were unfounded. The warning does not have to be complied with, but its failure to comply leads to the initiation of an administrative investigation, since something needs to be addressed with signs of violations.
“The Federal Antimonopoly Service draws the attention of Yandex LLC to the fact that, in accordance with part 8 of Article 39.1 of the Law on Protection of Competition, in the event of failure to comply with the warning within the prescribed time limit, if there are signs of violation of the antimonopoly legislation, the antimonopoly body is obliged to take a decision to initiate a case on violation antitrust laws. "
The signs have survived, the warning has not been implemented, the FAS is instituting a case. The absence of delays seems to be a confirmation of the new business-oriented policy of the FAS.
This is the first high-profile and resonant case on the Runet regarding such regulation on the Internet search market. Given its special status, I am almost certain that FAS will act surgically accurately, both in terms of evidence and subsequent prescription. In general, the case has two main possible outcomes:
- “Yandex is not a violator, there was no violation itself behind the signs of a violation” - this is if the FAS does not find sufficient evidence of discrimination. End of story.
- “Yandex has violated antitrust laws. Here is a prescription for elimination. Here are the new principles of market regulation. Here is a fine from Yandex's turnover in this market. "
Taking into account all the circumstances, it is difficult for me to imagine option 1. It would be strange to assume that the coalition for two years categorically and unreasonably asks the FAS to deal with Yandex, and the FAS, taking into account the stage with the warning and the lengthy consideration of the case materials, is simply going about the "wishes" companies. That is, it is logical to assume that the FAS still has a reason for the proceedings, the prosecution's strategy, and a sufficient amount of evidence.
If there was an objective violation behind the signs of a violation, then the further consequences are as follows:
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For those who are discriminated against by Yandex right now, this is both good and bad news. The good news is that it has finally become noticeable, and, like in many other countries, we will have regulation that will prevent the search engine from using its dominant market position to dictate its own rules of the game to the market. Well, you know, these are exactly the words that sounded at one time in an appeal to Google: “You and I have every chance of getting into a country where only one company will decide what services people will use ... we have always believed in competition and the right to choose a user " . Well, now the user will have the right to choose. With time.
Similar situations occur in almost all major national segments of the Internet: technologies are developing faster than the legal framework, and regulation simply does not keep pace with the formation of new markets. Nevertheless, the global trend is to ensure neutrality of search in various ways. In our case, the most legitimate and effective way is an administrative case on the fact of a violation and the introduction of a new regulation based on its results.
The bad news for those discriminated against by Yandex is that until the end of the case, Yandex can continue with the actions that created signs of violation. In a sense, changing and eliminating something now or continuing to bend your line is the sole choice of the search engine until the prescription appears. Cases have been reviewed for months, and all companies will continue to suffer losses due to unequal conditions in the search market. Then, when the case is completed, it is unlikely to take effect immediately. There will be a small window for the opportunity to challenge the FAS decision in court. If Yandex lawyers want to defend the purely financial interests of the company, then the final decision on the merits of the story will have to wait for a long time. It's about one and a half to two years in total.
That is, in 2 years something will change in the search results or not - this is a question of Yandex's voluntary desire to make concessions. Judging by the fact that Yandex does not agree with the accusation, this will not happen quickly.
How to work in the conditions of a continuing offense - wait and see, there is no clarity now.
This percentage turnover penalty, where will it go?
The fine will go to the budget, that is, in favor of the state. Such a measure is not the distribution of money between the affected participants and not some other form of compensation, it is a punishment for violating antimonopoly legislation, which led to an improvement in their financial performance. The penalty is, in fact, intended to make such a violation unprofitable in the long run.
I'd like to especially note the fact that the fine does not in any way solve the problem and is unlikely to have a key impact on Yandex's mood. Regulating the search market and defining its boundaries for competitive development is the real goal. FAS does not act in the interests of the applicant or the defendant, but acts in the interests of the market as a whole, therefore the solution to the problem lies precisely in the field of establishing fair conditions in the market (and defining the boundaries of this market).
What will happen to the regulation in the market?
If the situation ends with the definition of the boundaries of the search market and the norms for it, then this will mean the appearance of certain rules in the search results.
Right now, the main complaint concerns the so-called "sorcerers", that is, blocks above the issue that any company cannot get into. Managing these blocks, which cover a significant part of the user's screen before issuing, is a question of how Yandex. As I said, our estimate is that Yandex services, due to this and other actions, receive about 20% more traffic from Yandex than other market participants on average.
It looks something like this:
The problem is that nobody knows yet how to regulate this market. The search results are of high quality as long as they are not tweaked using a ranking formula. Therefore, the ranking formula is hidden by the search engine. Market regulation can mean disclosing the ranking rules to everyone (this is normal practice in other areas, and similar was contained in the warning). Yandex is hardly satisfied with this. The alternative is to simply remove the additional checkout blocks, but they are really useful. Now they take traffic from almost everyone in the market: many webmasters develop Yandex with their sites due to the fact that the answer to a request is shown directly in the search results, and not by referral. But this gives Yandex the opportunity to compete with Google for Runet. That is, this is actually a useful feature, it is simply not implemented so that everyone is on an equal footing.
This happens not only in the Russian Federation. The US authorities also have serious complaints about Google. Recently there was a story that was not particularly noticed in the media, but there was someone on the ears. Have been publishedarchival materials of investigations by the US Federal Trade Commission, from which it followed that the US authorities had evidence of Google's anticompetitive practices even during the presidency of Barack Obama, but the leadership of the antitrust regulator refused to file a lawsuit against the company. Journalists have published hundreds of pages of documents from which it follows that the Internet giant has acted in violation of US laws for at least the past 10 years. And this ultimately led to the establishment of a digital monopoly and "washing out" of Google's competitors from the market. The company not only acted as a proven method of buying competing services, but also forced mobile device manufacturers and carriers to sign long-term contracts that set Google as the default search engine.Huge sums figure in the agreements - tens of billions of dollars a year.
We really hope that the solution will be such that, on the one hand, it will not harm users in convenience, and on the other hand, it will eliminate unequal conditions in the search market. Let me remind you that although, from our point of view, Yandex has a habit of copying successful projects and using its traffic to promote its counterparts, we are sure that in conditions of fair competition this is normal. Therefore, if the search results are neutral, we will be able to compete freely. The question is how quickly the issue will become neutral and how exactly this will be achieved.