Google agrees to pay $8mn Russian antimonopoly fines

By bne IntelliNews April 17, 2017

Google on April 17 finally agreed to pay almost $8mn in fines imposed last year by Russia’s Federal Antimonopoly Service (FAS) for abusing its monopolistic power and preinstalling its applications on Android smartphones in Russia.

The case that has been dragging since 2015 was already threatened to turn criminal by FAS officials in late 2016 and highlighted the scrutiny of foreign IT majors in Russia.

Responding to a complaint by Google’s main Russian competitor Yandex, FAS fined the US company RUB438mn, or 9% of its reported profits on the Russian market in 2014, plus inflation.

Google will also pay two other fines totalling $18,000 for failing to comply with past orders by state regulators.The settlement will last six years and nine months, TASS quoted the deputy head of FAS Alexei Dotsenko as saying.

Google challenged the penalty in several appellate courts before caving into the government’s demands.  It also said it reached a commercial agreement with Yandex on pre-instalment of apps on Android devices and providing “additional opportunities for the promotion of the Yandex search service in the Chrome browser”.

The deal closed with Google is the best Yandex could hope for, Renaissance Capital commented on April 17. However, the agreement is not seen as “a game changer for Yandex’s positioning on mobile”.

“The fact that Yandex is now free to negotiate pre-installation deals with handset manufacturers doesn’t mean it will be more successful than Google,” Renaissance Capital wrote, reminding that Google’s popular apps, including YouTube, Gmail and Chrome will give it advantages in any negotiation.

VTB Capital doesn’t see any immediate impact on Yandex’s financials from the deal, also expecting the competitive environment to remain tough.

In another recent case against a foreign tech major, FAS in March found Apple Rus guilty of fixing prices for a models of iPhone 5 and 6 series. Last month, sources of  Vedomosti daily said FAS is also now considering slowing data traffic to websites of foreign companies defying the decisions of Russian courts.

Other foreign internet majors that ran into trouble in Russia include LinkedIn, with communications watchdog Roscomnadzor tweeting “R.I.P.” beside the networking website’s logo after banning it in early March for failing to comply with new data storage legislation.

The social networks Facebook and Twitter regularly face demands to delete content that is ruled unlawful by Russian courts.

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