Russia Gives Google a Month to Rectify Antitrust Breaches
October 06 2015 - 8:00AM
Dow Jones News
MOSCOW—Russia's antimonopoly watchdog has ordered Google Inc. to
rectify its antitrust law violations, potentially paving the way
for a hefty fine and helping local search engine Yandex NV.
The agency gave Google a deadline of Nov. 18 to stop its
practice of bundling—pre-loading its own apps and services to give
them priority over rivals on its Android mobile operating
system.
The regulator also said it had initiated an administrative case
against Google, meaning the search giant may face a fine of up to
15% of the 2014 revenue from the preloaded apps if found
guilty.
"To restore competition on the market, Google should amend
agreements with mobile-device producers within a month and exclude
the anticompetitive clauses that limit installment of apps and
services by other developers," Russia's Federal Antimonopoly
Service said in a statement late Monday.
A spokeswoman for Google Russia responded by saying: "We will be
studying it [the full version of the ruling] to make a decision on
further steps. Device makers are free to use Android with or
without Google applications and consumers have complete freedom to
use rival applications."
In mid-September, Google was found guilty in a rapid Russian
antitrust probe of anticompetitive practices related to how the
company preinstalls its own apps on Android handsets.
The investigation began in February after competitor Yandex
lodged a complaint against the California-based giant.
"We hope that the FAS's ruling will help to restore fair
competition on the market, but to what extent will depend on how
this ruling will be executed," Yandex said. "Additional measures
might have to be taken unless the situation changes."
Konstantin Chernyshev, an analyst at Uralsib, said the Russian
regulator's decision could generate some short-term support for
Yandex stock, but added: "It remains to be seen how effectively the
decision will be implemented, and it is hard to estimate the effect
the decision could have on market share in the online search
market."
The latest ruling highlights regulation as one of the biggest
risks facing Google, which has been tied up for the past five years
in an antitrust probe in the EU.
Earlier this year the 28-member bloc charged Google with abusing
its dominance of the European online search market to favor its own
shopping search service, and launched an investigation of Android,
including the rules Google imposes on phone makers to get access to
Google services and apps.
In 2013 Google settled with the U.S. Federal Trade Commission
and agreed to change some business practices, giving advertisers
more flexibility to use other ad platforms along with its main
search advertising service, AdWords. Later that year, South Korea's
Fair Trade Commission ruled Google had not harmed competition by
requiring smartphone makers that offer Android to load Google's
search engine.
Russia and several other countries have cracked down on U.S.
Internet companies, launching investigations into their market
power and introducing new regulations that give them more access
to—and control of—information and user data stored by these
companies.
Google shut its engineering office in Russia in late 2014 ahead
of a controversial law requiring Internet companies to store
Russians' personal data within the country's borders.
Any phone maker can use Android. But if a phone maker wants to
use popular Google services like Gmail or Maps, or wants access to
Google's Play app store, it must preinstall a package of these
Google apps.
This helps Google distribute its services to the more than one
billion Android device users, but it can also mean phones come
loaded with some apps that some users and phone makers may not want
on the gadgets.
Several device manufacturers that pre-install Yandex apps
notified the company in 2014 that they were "no longer able to
pre-install Yandex services," such as Yandex's search and map apps
on Google's Android devices, prompting Yandex to file its antitrust
complaint.
Write to Olga Razumovskaya at olga.razumovskaya@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
October 06, 2015 07:45 ET (11:45 GMT)
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