Google’s Subsidiary in Russia Could File for Bankruptcy Due to Heavy Penalties

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Google recently complied with the US government sanctions against Russia because of the ongoing war with Ukraine. The Russian authorities have retaliated with actions that could force Google’s Russian subsidiary to file for bankruptcy. A Reuters report says the Kremlin has stopped just short of blocking access to the search giant’s services.

The report says that Google’s parent firm, Alphabet Inc., has been under pressure from the Russian authorities for the last few months. The authorities allege that the company restricted access to some Russian media on YouTube and failed to delete content the government deems illegal. A Google spokesperson told Reuters:

“The Russian authorities seizure of Google Russia’s bank account has made it untenable for our Russia office to function, including employing and paying Russia-based employees, paying suppliers and vendors, and meeting other financial obligations. Google Russia has published a notice of its intention to file for bankruptcy.”

The report says that Google’s bank account was seized as a whole for the first time in April. Bailiffs took 1 billion roubles (around $15 million) from the company because it did not restore the YouTube channel of a TV network owned by a sanctioned businessman. The company did not specify if this seizure led it to the cusp of bankruptcy in the region or if other seizures had been made as well. However, records from Russia’s Federal Bailiffs Service list two seizures (undisclosed amounts) since March, besides additional fines and fees levied on the Big Tech firm. The data showed that the company had been fined 7.2 billion roubles for failure to delete content the Kremlin deemed illegal. The fine later went up by 506 million roubles after added enforcement fee.

Google’s subsidiary in the country was reportedly planning to declare bankruptcy. Around mid-March, it was clear that it wouldn’t be able to dispense severance pay and other mandatory payments for staffers in a timely manner. While this means a lot has changed for Google as a business in Russia, much hasn’t changed for users. Free services such as Gmail, Google Maps, Android, and Google Play will remain available. However, ad sales and other commercial activity have been suspended.

The sanctions appear to be taking a heavier toll on Russian users and businesses reliant on Google services than on the search giant itself. Last month, it professed that Russia accounted for just one percent of its revenue last year, suggesting the sanctions won’t dent Google’s financials.

[Via Reuters]


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