Russia’s largest search engine, Yandex.ru, is predicted to raise about $1.5 billion if they follow through with an IPO this year in London. The move would come on the heels of a successful IPO for Mail.ru Group Ltd. (LON:MAIL), Russia’s largest free email provider. Still, I expect Yandex to generate even bigger waves in the media than Mail.ru. Investors love search engines, and Yandex has proven it can compete with heavyweight Google, Inc. (NASDAQ:GOOG).

“While Google remains the undisputed leader in most major markets, there are some notable exceptions,” iSuppli tells CNET. “These include South Korea, Russia and, most importantly, China. In these markets, the dominant search engines belong to local operators, i.e., NHN, Yandex, and Baidu.”

Google’s the most visited Web site in the world and in the U.S., based on data from Alexa.com. Still, it can’t quite overtake Yandex in Russia. There, Google’s in fourth place behind Yandex.ru, Mail.ru and social networking site Vkontakte.ru, and according to stats from LiveInternet, Yandex’s share of the search market grew by 5.2% to 64.1% just in December 2010.

Yandex hasn’t released numbers on its profitability (or lack thereof), but the company did announce that its 2010 revenue increased 43 percent year over year to 12.5 billion rubles (roughly $420 million). Interestingly, the company has also expanded its reach beyond search in ways that Google hasn’t. It’s got Yandex Maps, of course, but it also operates an e-payments system in Yandex Money, a traffic app and Yandex Photos.

“Russian technology is just as good, if not better than a lot of similar US companies,” Yandex CEO Arkady Volozh tells Emma Barnett of The Telegraph. “Yandex has been able to keep ahead of Google because of the quality of its search and other key services. People will only leave a service if the quality starts dropping. In Russia, we have strong technological capabilities which shouldn’t be undermined.”

The biggest threat to Yandex’s future, though, might not come from Google. It might be the Russian government itself. Russian President Dmitry Medvedev has called for the creation of a national search engine in Russia; one that is owned and operated by Russians (unlike Yandex, which is owned by Netherlands-based Yandex N.V.).

Russian media have speculated that the government there has dumped more than $100 million into the creation of a national search engine. Oppositionists believe the national search engine would be used to censor content on the Internet in Russia.

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