October 24th, 2008
Russia rebuffs Google on purchase of Begun search engine
Russia has blocked Google’s proposed $160 million acquisition of Zao Begun, a search-and-contextual-advertising company owned by the Russian company Rambler Media, IDG reports.
Google was “very disappointed” with the action by the Federal Antimonopoly Service. “We strongly believe that this acquisition will enable us to significantly improve opportunities for Russian users, advertisers and publishers as well as the entire industry,” the company said.
But, according to RBS Daily (scroll down):
FAS head Igor Artemyev said Google had not provided reliable and sufficient information about persons who could influence the company’s economic operations and the full list of owners, which prevented FAS from calculating the possible consequences of the deal, in particular whether it would help or hurt competition. Google will have to file a new request, he said.
With Begun, Google, which currently has a mere 5% of the Russian market, would have become the biggest competitor to Yandex, which controls 64% of the market. Begun currently has a 20 percent share.
So, if FAS had allowed the merger you would have two strong companies muscling it out. Google would probably have quickly achieved parity with Yandex, taking, say 15 or 20 percent away from them. Russian users would have benefited from two strong competitors. The denial, then, smells much more like protecting the local company against the mega-American company. Why should Russia let a U.S. company have a big chunk of the Russian market? Only for the benefit of its consumers, but I guess that’s not such a big consideration.
