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Why FAS Refused Google’s Acquisition Of Begun

Files under: Inside View, News, Tech
Posted by: Quintura @ 01:20 [24. 10. 08]

Rambler Media, which operates one of the most popular Russian internet portals Rambler, has announced that the Russian Federal Anti-Monopoly Service (FAS) refused Google‘s application to acquire 100% of Russian contextual advertising company Begun.

Rambler Media, which owns 50.1% of Begun, agreed to sell the company to Google for $140 million last July.

Google had 5% share of $210 million Russian contextual ad spending in 2007. Begun had 20% and Yandex had 64% share of online ad spending, respectively, according to iConText. Technically, Google and Begun together will hold less than 30% market share. However, if Google had acquired Begun, there would have been only two major contextual advertising companies left in Russia – Yandex and Google. That would have been a duopoly.

According to Wikipedia, duopoly is “specific type of oligopoly where only two producers exist in one market. In reality, this definition is generally used where only two firms have dominant control over a market”. In fact, a duopoly usually leaves a limited room for competition and product innovation.

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