[Exclusive] 'Russia's Google' Yandex Lands in Korea... Secret Talks with Coupang Underway

Recent Establishment of Korean Subsidiary 'Yandex Korea' Led by Asia Division Head
Expansion Strategy for Autonomous Driving Business...Seeking Legal Counsel to Address Domestic Regulations
Hyundai Mobis' Autonomous Driving Partner...Unveils 'Level 4' Taxi Based on Sonata
Delivery Robot Service Expected to Launch...In Talks with E-commerce Companies like Coupang
Holds 60% of Russian Search Market...Listed on NASDAQ in 2011

The delivery robot 'Rover' developed by Yandex, a global information and communication (IT) company known as the 'Google of Russia.'
[Image source=Yonhap News]

[Asia Economy Reporter Lee Junhyung] Yandex, a global information technology (IT) company known as the 'Google of Russia,' has landed in South Korea. Yandex, which is jointly developing autonomous driving technology with Hyundai Mobis, is expected to fully launch related businesses in the Korean market. It is also understood that they are preparing an AI-based autonomous delivery robot service targeting the rapidly growing delivery market due to COVID-19.

According to industry sources on the 15th, Yandex recently established its Korean subsidiary, 'Yandex Korea,' and set up an office in Gangnam Building, Seocho-dong, Seocho-gu, Seoul. The capital of the Korean subsidiary is about 600 million KRW. Sergey Ustinov, head of Yandex's Asia business division, is in charge of the Korean branch. It has been confirmed that a Korean-origin executive who was responsible for business strategy at Yandex headquarters joined the Korean branch last month. Since senior executives who led Yandex's Asian business have been consecutively assigned to the Korean branch, this is interpreted as a strategic move to accelerate the domestic market penetration.

Expansion of Autonomous Driving Business

The industry views Yandex's entry into Korea as an effort to expand its autonomous driving business. In fact, Yandex is reportedly receiving legal advice from a domestic law firm to respond to South Korea's autonomous driving regulations. Yandex entered the autonomous driving technology field in 2017 and has already established itself as an industry leader. Global investment bank Morgan Stanley, in a report released this September, named Yandex's autonomous driving subsidiary Yandex SDG as a global leader in the autonomous vehicle market alongside U.S. Argo AI and China's Baidu. Morgan Stanley valued Yandex SDG at $7 billion (approximately 8.3 trillion KRW).

Yandex's partnership with Hyundai Motor Group in autonomous driving also supports this outlook. Since 2019, Yandex has been jointly developing autonomous driving technology with Hyundai Mobis. Yandex is responsible for software (SW) such as AI algorithms, while Hyundai Mobis handles hardware (HW) like sensors and controllers. Last year, they showcased a 'Level 4' autonomous taxi developed based on the Sonata together with Hyundai Mobis. Level 4 autonomous driving means no driver intervention is needed within a designated area. It is the step before full autonomous driving, Level 5. Recently, Hyundai Mobis and Yandex have also ventured into developing LiDAR sensors for autonomous vehicles. The goal is to develop LiDAR sensors that perform 100% even in harsh weather road conditions. Yandex plans to use these LiDAR sensors as the main sensors for autonomous taxis to be piloted not only in Russia but also in the U.S. and Israel.

Yandex also showcased a 'Level 4' autonomous taxi developed last year in collaboration with Hyundai Mobis, based on the Sonata. Level 4 autonomous driving refers to self-driving that does not require driver intervention within a designated area. The photo shows Yandex's autonomous taxi.
[Photo by Yandex website capture]

Eyeing Delivery Robot Services

Another goal is delivery robots. Since last year, Yandex has been piloting services using its self-developed delivery robot 'Rover' in Moscow, Russia. The company is reported to have been in behind-the-scenes talks with e-commerce companies such as Coupang for delivery robot services. Considering that Yandex has identified the rapidly expanding food delivery market since COVID-19 as a future growth area, the industry explains that it cannot help but pay close attention to the Korean market, where delivery demand is high. According to the Korea Fair Trade Commission, the domestic food delivery market size doubled in one year from about 9 trillion KRW in 2019 to 20 trillion KRW last year.

It is also analyzed that the domestic delivery market is optimized for the advancement of autonomous driving technology. Especially, Seoul's three Gangnam districts (Seocho, Gangnam, Songpa) have high delivery demand and population density, allowing the relatively rapid construction of big data, which is key to autonomous driving technology. The big data secured through delivery robots can also be utilized in autonomous vehicle development. An industry insider said, "Even globally, Korea ranks among the highest in delivery volume per unit area," adding, "In the U.S., the concept of last mile (the final step of delivering goods to consumers) is still weak."

Yandex's delivery robot 'Rover.' Following France earlier this year, Yandex has partnered with Grubhub, the 'American version of Baedal Minjok,' to launch delivery robot services in the United States as well.
[Photo by Yandex website screenshot]

The delivery robot industry is closely monitoring related trends. There is concern that Yandex, backed by large capital, could dominate the nascent domestic delivery robot market. The domestic delivery robot market is still in its infancy due to regulations. Some companies, including Woowa Brothers, operator of Baedal Minjok, which was the first to develop delivery robots domestically, are running limited pilot services through regulatory sandboxes.

Technological and price competitiveness are also threatening. According to the industry, Rover replaced the expensive LiDAR sensors, which were considered core components of autonomous delivery robots, with cameras to enhance price competitiveness. Its performance has been proven through repeated operation tests under Moscow's harsh climate conditions. Another industry insider said, "Yandex's technological and financial power is incomparable to domestic delivery robot companies like Woowa Brothers," adding, "If Yandex starts delivery robot services in Korea, it is highly likely to become a 'game changer.'"

Russia's No.1 Search Portal

Yandex operates a food and grocery delivery service called 'Yango Deli.' The photo shows a Yango Deli delivery rider. Photo by Reuters Yonhap News

Yandex is Russia's No.1 search engine, listed on the U.S. Nasdaq in 2011. It holds about 60% of the Russian search market share. Google's share in Russia is about 40%. In former Soviet countries such as Kazakhstan, Belarus, and Ukraine, Yandex holds 10-15% market share by country. In its home base Russia, it maintains a monopoly position in various businesses including delivery, mobility, e-commerce, and online video services (OTT). In Korea, this is akin to monopolizing a market divided among platform companies like Naver, Kakao, Coupang, and Woowa Brothers.

Yandex's delivery robot service is performing well in overseas markets. Following France this year, Yandex partnered with Grubhub, the 'American Baedal Minjok,' to launch delivery robot services in the U.S. It has also expressed intentions to sequentially introduce delivery robot services in Israel, Korea, and other countries in the first half of this year. Related performance is also on the rise. Yandex's Foodtech division revenue in Q3 this year was 9.8 billion rubles (about 157.9 billion KRW), up approximately 124% from 4.4 billion rubles in the same period last year.