Russia Says Google Broke Antitrust Laws

  • Yandex has been losing market share to its U.S. Rival
  • Yandex shares rise most since April on watchdog's decision

Google Inc. has violated Russian antitrust laws by requiring that manufacturers pre-install its services on their devices, the local antitrust authority ruled, in a blow to the Internet giant’s bid to overtake domestic search-market leader Yandex NV.

Yandex’s stock soared as much as 13 percent in New York after the ruling. The Russian company complained to the Federal Anti-Monopoly Service earlier this year, requesting that its competitor be ordered to unbundle its services from the Android operating system and application distribution platform Google Play. Yandex has said Android’s default options push mobile users to Google services including search and maps, limiting consumers’ ability to choose such services from Yandex or other vendors.

Yandex has been losing market share to Google recently as the Mountain View, California-based rival is strongly positioned on devices running Android. Yandex’s share of Russian searches fell to 50 percent last month compared with 54 percent in January of 2014, according to LiveInternet.ru, while Google’s share rose to almost 42 percent from 34 percent.

“It’s a violation that Google required equipment makers to pre-install its services, including search, to get the Google Play application store on their devices,” Vladimir Kudryavtsev, head of the IT department of the Federal Anti-Monopoly Service, said by phone on Monday. The regulator will issue detailed instructions on remedies to Google within 10 days, Kudryavtsev said.

A Google representative said by e-mail that the company will study the watchdog’s decision once it receives full instructions.

“This is good news for Yandex, which has been losing market share as smartphones powered by Google’s Android gained popularity,” said Konstantin Belov, an analyst at UralSib Capital. “A lot of users have been using Google services by default, and Yandex may get a chance to win them back.”

Yandex had its steepest intraday advance since April 15, and traded 6.8 percent higher at $12.04 in New York at 1:03 p.m.

‘First Jurisdiction’

“We hope that the antitrust decision will help to restore competition in the market,” Yandex said in an e-mailed comment. “While the European Commission has already started a preliminary probe into similar practices, Russia is the first jurisdiction to recognize these practices as uncompetitive.”

Introduced in 2008, Android was Google’s answer to Apple Inc.’s and Microsoft Corp.’s operating systems as the company sought to expand beyond Internet searches into mobile phones.

The European Union in April escalated its probe into Google, accusing the company of abusing its dominance of the search-engine market. The EU is also probing Google’s strategy of bundling software such as YouTube, Maps and Chrome with Android and whether the practice harms rival app developers as well as device manufacturers that have to take the whole package.

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