Moscow — Russia’s anti-trust regulatory service — Federal Antimonopoly Service, (FAS), on Thursday hampered a $140 million bid by Google Inc. to acquire Begun, Russia’s biggest contextual ad service, claiming that Google had not provided enough information that would allow FAS to properly assess its consequences and thus potentially hurt competition.
The FAS fears that the deal would reduce competition and Google would dominate the Russian Internet advertising world.
Google stated in July that it would invest $140 million to buy the ad service, ZAO Begun, from Rambler Media Ltd., which operates one of the most popular Web portals in Russia. Google had expected the deal to be finalized during the third quarter.
At the time, Google said the deal was part of its moves to improve service for users, partners and advertisers in Russia, which has a fast-growing digital advertising market.
Begun is the largest contextual advertising network in the Russian sector of the Internet. Begun’s keyword-targeted site network has distribution relationships with about 143,000 Web sites, and offers pay-per-click, pay-per-call and other performance-based ads. It provides a service similar to Google’s targeted text advertisement serving program AdSense. Founded in 2002, Begun also offers an agency licensing and training program for resellers of its network inventory.
The FAS asserts that Google has failed to submit the proper and complete info on all the company employees working in Russia. Not having this info, according to the FAS, prevented the FAS from properly evaluating the consequences of such a deal correctly.
“Having reviewed the documents and information received relating to this deal, FAS on October 22, 2008, made a decision to refuse to satisfy the appeal,” FAS said in a statement on its website www.fas.gov.ru.
FAS have been stepping up its presence over recent months as part of a plan to build the service up into one of the government’s most powerful agencies.
Russia’s anti-monopoly service has been under the spotlight since Vladimir Putin, Russia’s powerful Prime Minister, demanded the anti-trust service become more active.
“We are very disappointed to hear that FAS has come to this decision since 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,’ said Google Russia PR director Alla Zabrovskaya.
“At this time, we are awaiting the FAS’s decision. Once the review process is complete, we will decide on our next steps.”
Svetlana Gladkova of Profy gives her honest editorial:
Now it looks like I was not alone questioning if Google would build yet another monopoly with this acquisition: Today Russian news outlets report that the Russian Federal Antimonopoly Service has banned the acquisition…
But I believe it is quite obvious that the authorities have decided that increasing Google’s presence in the Russian contextual advertising market could potentially damage the market and the competition.
Google already is tangling with antitrust authorities in the United States, Canada, and Europe over a search-ad deal with Yahoo.