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The “super app” concept has been gaining popularity across the world, and even the pandemic could not change that calculus. Yandex, Russia’s leading tech company, has just emerged as the latest participant in this global race.
A “super-application” is the digital equivalent of a physical cluster of businesses for which proximity enables improved collaboration across operations. It creates an ecosystem where the user’s time is monopolized and there is no need to use a variety of apps. As a result, there is a consensus that by building a “super app,” a big tech firm can grow and beat the competition.
The model has been rapidly growing in emerging markets such as China and Southeast Asia, and also across the United States.
In China, WeChat is a classic example of a super-app that many Chinese find indispensable. In addition to its basic function of sending messages, it can order food, convey daily transactions and even book flights.
In Indonesia, Gojek, valued at US$12.5 billion, is another example of a super-app focusing on food and payments, in addition to core transportation. In the United States, Uber and Facebook are also actively exploring ways to become major super-apps of the West.
In China, with its massive urban population and state-driven patterns for creating vertically shaped major corporations, digital versions of “national champions” emerge as trendsetters.
Although “national champions” might not be very effective in terms of international competition against more mobile private companies, it seems that super-apps are, for now, widely believed to be the future of the Internet. In effect, it is likely that more companies will eventually join the race, while competition will take place in different businesses and geographies.
This week Yandex announced the launch of Yandex Go, which could be Europe’s first super-app to combine all key aspects of on-demand transportation and delivery. The new platform will replace the Yandex.Taxi app and add on Yandex’ car-sharing service, and will further integrate schedules and routes of above-ground transport that previously existed only in the company’s separate platforms.
Yandex Go is Russia’s second super-app after Tinkoff, which launched its platform last December. But Yandex, a NASDAQ-listed tech company working in 17 countries across Europe, the Middle East and Africa, is clearly bigger, and its size could be the competitive advantage helping the company to scale up operations abroad.
The decision could also reflect the company’s strategy to transform its businesses as driven by changes delivered by the Covid-19 pandemic and intensifying global competition.
Russia’s economy declined by 8.5% in the second quarter, at the peak of the pandemic, and Yandex was forced to transform.
The company was hit financially by declining revenues from online advertising and taxis, but managed to use the lockdown as an opportunity to expand the reach of its other businesses, such as food delivery, e-commerce and media. It also finally managed to break up its e-commerce partnership with Sberbank, bringing to an end a decade-long partnership that had caused major concerns among investors.
The launch of a new super-app should help Russia join the global competition. It might turn out to be extremely appealing to the Russian-speaking segment of the global Internet that has grown considerably in recent years and currently encompasses more than 103.1 million users online and constitutes the eighth-largest linguistic group in the world.
Further improvements in services and their expansion could also help Yandex expand its presence across Eastern and Central Europe, as there is currently no known European super-app.
All in all, the launch of Yandex Go is a strong sign that despite the disruption delivered by the pandemic, the global super-app race will continue to intensify, and Russia is a part of it.
The author is a political analyst and independent journalist. He is a consultant on policy and strategy and has written about Russia’s foreign policy. More by Dimitri Frolowscki