Yandex Buys Mapping Company

Federal Antimonopoly Service of the Russian Federation approved the purchase of the mapping company “GIS technology” by Yandex. The representative of the FAS said that the Yandex receives permission to acquire 99.9% of the share capital of LLC “GIS technology”. It is expected that the deal, the amount of which equals couple of millions of dollars, will be held next month.

It should be noted that this is not the first purchase of Yandex associated with maps. In 2007 it bought the company “Smartcom”, which develops software for mobile OS: J2ME, Windows Mobile, Symbian. Later, “Smartcom” has created a popular mobile application “Yandex Maps”.

In 2008, the search engine purchased the company “SMIlink”, which was engaged in collecting, processing and providing data about traffic jams on roads of Russia. Subsequently it was transformed in “Yandex Jams”.

It is known that “GIS technology” specializes in the development of mapping software, and since 2008 provides maps for an online service “Yandex Cities”. Previously, the company created maps “Megalopolis” for Autonavigators JJ-Connect. However, by the end of 2009 the project “Megalopolis” stopped the updates, and in 2010 it was closed.

As explained by Yandex, it needs a mapping company to create its own digital maps. At the moment 86% percent of the revenues of the company come from contextual advertising. In order to diversify the revenue base it was decided to expand the system of monetization of the service “Yandex Maps”. This profit will be distributed between third-party developers as well, who will cooperate with the search engine on the scheme API, planned to create new applications based on this platform.

Because at this moment the IT-company doesn’t have a license for mapping activities, the purchase will legalize the existing projects, including “Popular maps” created directly by users.

Having purchased “GIS technology” Yandex intends to reverse the cycle of work with maps. It has already assembled a team of cartographers. At the same time Russia's largest search engine will continue to work with its current partners.

Undoubtedly, the purchase of GIS technologies indicates that Yandex intends to become an independent player in the rapidly growing market of digital maps. But here he will face serious competitors, among which Rosreestr, AFK Sistema, major sectorial companies from Navteq and TeleAtlas.

According to statistics, the monthly audience of “Yandex Maps” in May equaled 9.2 millions of users, which again proves the popularity of this map service.