Google barred from buying Russian advertising company

In an interesting piece of protectionism, Google’s bid to buy Begun, the advertising arm of Russian search engine company Rambler Media, has been blocked by the Russian competition regulator.

Russia is the only European country where Google doesn’t have a dominant position in the online advertising market – it’s been struggling to push its way past both Rambler’s Begun and Yandex Direct.  So the deal, which would have been worth around $140 million, would have massively boosted Google’s share of the online advertising industry in Russia.

Some are speculating as to whether this is a manifestation of government protection of Yandex who, of course, will be thrilled at Google’s defeat – they no longer face the immediate prospect of a super-competitor.

I think there is certainly an aspect of government protection of key Russian firms.  But I also think the move will genuinely improve competition – a three way battle for market share can’t help but lead to innovation.  If all goes well, Russia could become a testbed for all kinds of exciting innovations in contextual advertising, which will benefit Russia in the longer term.

Small Russian publishers will also be rejoicing – apparently, Google is much slower at paying its publishers than its Russian counterparts.

Rambler will understandably be annoyed, though – they’ve lost out on a profit of $50 million, which they had planned to invest in future acquisitions themselves.  That in itself will have a bit of a knock on affect on smaller Russian companies, who may now find it more difficult to take their more innovative projects into the mainstream without the support that investment from a large company like Rambler could have provided.

Yandex’s new office in Silicon Valley

This week’s other Russian internet news of note is Yandex’s decision to open their first office in Silicon Valley. Here are some pretty pictures:

Not quite sure what Yandex plan to do in their shiny new US office. Anyone know?