Yandex NV fell for a sixth day in New York,the longest losing streak since March, as the Russian parliament considers an Internet privacy bill that could impose regulatory costs on the country’s biggest search engine.
The shares sank 3 percent to $16.26 on Monday, the lowest close since April 2. The stock has declined 7.7 percent since June 12. The so-called right-to-be-forgotten bill, which passed in first reading in the lower house of the Russian parliament last week, would allow people to ask search engines like Yandex to delete information they consider “unreliable” or is older than three years from online search results.
The legislation would require search engine companies to “interfere with the search process,” which would mean doing extra work and paying fines if they fail to follow the regulation, Sergey Libin, an analyst at ZAO Raiffeisenbank, said by phone Monday. “The stock is underperforming as a reaction to the bill,” he said.
The proposed rules, which could take effect as early as 2016, violate people’s constitutional rights to freely seek, produce and disseminate information, Moscow-based Yandex said in a June 15 statement. Russian lawmakers have agreed to soften the bill after meeting with representatives from Internet companies, Kommersant reported Monday.
Search-engine operators would have three days to comply with requests or risk fines of as much as 3 million rubles ($55,600) under the proposals submitted to the State Duma, the lower house of parliament.
The concern for the Internet industry is that the bill in its current form may change the nature of search engines’ operations in Russia, according to Libin and Konstantin Belov, an analyst at UralSib Capital in Moscow.
If Yandex has to moderate the information it provides and the way it presents search results, then it will become a different kind of business, Libin said.
“It should be about technology,” Belov said in a phone interview on Monday. “If you have to make a decision based on something very different, it does affect the operations of the company.”
The bill comes amid a broader push by President Vladimir Putin to tighten the government’s grip on the Internet amid tension over the conflict in Ukraine and Russia’s annexation of Crimea. A law passed last year requires bloggers with more than 3,000 daily viewers to register with federal authorities, which can block sites they believe contain “extremist” information.
The right-to-be-forgotten bill will have a limited impact on Yandex and other search engines, apart from forcing the search providers to create a new unit to handle deletion requests, Mitch Mitchell, an analyst at BCS Financial Group in Moscow, wrote in an e-mail on Monday.
“The law is not going to stop people from searching, nor is it likely to cause a loss in available ad inventory for the search companies,” he said. “I don’t see this particular draft law as a reason for investors to be negative on the stock.”
Yandex was the worst performer in the Bloomberg Russia-US Equity Index, which gained 0.6 percent to 59.63 on Monday. United Co. Rusal rose 3.5 percent to HK$4.50 in Hong Kong before trading unchanged at HK$4.35 at 10:40 a.m. local time.
The bill may be revised to match its European Union counterpart -- a rule created last year that forces Google to remove links with people’s names from search results at their request, Libin said.
Unlike the EU law, the current Russian bill does not require individuals to provide the specific hyperlinks they want removed, only the general information they want struck from the web. The search engine itself will then have to locate all the links, verify them and remove them.
“It is obvious that this is an impossible task,” Yandex said in a statement last week.