Russia tightens grip on media landscape as Yandex sells homepage, news to rival VK

(This content was produced in Russia where the law restricts coverage of Russian military operations in Ukraine)

MOSCOW (Reuters) - Russia's leading internet firm Yandex (NASDAQ:YNDX) on Tuesday said it had agreed to sell its news aggregator and yandex.ru homepage to state-controlled rival VK, a dramatic move that will likely further limit Russians' access to independent media.

The all-share deal, in which Yandex will acquire 100% of food delivery service Delivery Club, marks a significant shift in Russia's internet landscape, with Yandex effectively passing the reins that steer the distribution of online content to a Kremlin-friendly actor.

Moscow's years-long suppression of independent media sharply intensified after Russia sent tens of thousands of troops into Ukraine on Feb. 24, passing a law banning what it calls "false information" about Russia's armed forces and quashing many organisations' ability to broadcast freely.

"The board and management of Yandex have concluded that the interests of the company's stakeholders...are best served by pursuing the strategic exit from its media businesses and shifting to a focus on other technologies and services," Yandex said in a statement.

Nasdaq-listed Yandex, often referred to as "Russia's Google (NASDAQ:GOOGL)", has complied in recent years with Moscow's demands and the threat of fines over which publications' stories can feature on its news aggregator, drawing criticism over its effect on media freedom.

Yandex restricts access to sites, many of which are independent media, that have been banned by communications regulator Roskomnadzor, and in February started warning Russian users seeking information about events in Ukraine of unreliable information online.

A former head of Yandex News, Lev Gershenzon, on March 1 described Yandex as a key element in hiding information about the conflict in Ukraine. Yandex has denied being complicit in censorship.

"We are buying our freedom," a source close to Yandex said. "This business had been such a weight on our feet.

"This will enable us to do our business significantly depoliticised, practically completely depoliticised."