Russian newspaper Vedomosti reports giant state-owned wireline carrier Rostelcom plans to develop a local search engine known as Sputnik.ru. Yandex (YNDX -1.2%), estimated to have 62% of the Russian search market, is ticking lower on the news.
There's plenty of skepticism about Rostelcom's ability to do serious damage to Yandex, both due to Yandex's dominant mindshare and the fact Web search is well-removed from Rostelcom's traditional domains of expertise.
However, Vedomosti's sources indicate state institutions may be required to use Rostelcom's engine instead of Yandex's. That, in turn, suggests the Russian government may be wary of Yandex's clout. Analyst Ivan Kim suspects the initiative was imposed on Rostelcom by the government.
Yandex remains close to its 52-week high of $39.44. Shares +76% YTD. Q3 results arrive on Oct. 24.