Google goes East: Begun is not yet Googled
Posted by Anna Chertkova @ October 17th, 2008 in Media News
In July, Google agreed to buy for $140 million 100% of the company Begun, Russian contextual advertising company, from the UK-registered Rambler Media Ltd., operating one of Russia’s most popular internet brands Rambler. The parties had planned to complete it before the end of September, however due to skepticism on behalf of the FAS (Federal Antimonopoly Service) regarding the final transaction, the negotiation was postponed to October 22nd.
And this is where things start to get really interesting: a source close to Begun claims that the “story has acquired a political connotation”. Allegedly, the administration of the president showed signs of discontent about the deal last summer and went even further, suggesting the shareholder of Rambler, Profmedia, a company owned by Russian millionaire Vladimir Potanin, to revoke the transaction.
Vedomosti, Russia’s business newspaper, referred to a source familiar with the management of Rambler saying that the Russian Prime Minister Vladimir Putin did not approve on the sell-out of a Russian company to American Google, which -by the way– is co-founded by Moscow-born Sergey Brin.
Earlier, a senior state official was quoted saying that the state considers major Internet companies as relevant information resources. The state was said to be looking for a “coherent co-investor” for Yandex, the leading Russian search engine. Begun is Yandex’s main competitor in the contextual advertising arena and holds a total share of 20.2% compared to 64% from Yandex. If the Google/Begun deal gets approved, the joint share of Rambler and Google in search queries will amount to 30% against 56% Yandex alone.
The online advertising market in Russia is booming: it has been estimated at $260 million in the first half of 2008, a total 73% increase compared to the same period in 2007, according to MindShare Interaction.
No wonder, the Begun deal is so juicy…
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Comments
anatinge
October 20th, 2008
This is the way it is done in Russia. It is reality…
Business is fully depend on its political lobby and if you want to work on this market you must accept its rules. Maybe that is why Murdoch was in a hurry to sold his russian assets NOG and Google was looking for policy counsel who will advocate before the parliament on behalf of Google…
Anna
October 20th, 2008
Hi Anatinge, thank you for the comment. I see you got it all right.. Anyway I’m looking forward to knowwhat happens on October, 22 when there should be another hearing of the deal…
Google/Begun comedy-drama, Part 2 , 77Lab
October 23rd, 2008
[...] The Federal Antimonopoly Service (FAS) from the Russian Federation has finally put its foot down on the Google-Begun deal as anticipated in our previous article. [...]