The Russians have opened a second front! (against Google)

February 20, 2015, 11:39 AM UTC
Inside Headquarters Of Internet Company Yandex NV
A customer browses a display of smartphones for sale, including handsets manufactured by ZAO Explay, inside a Svyaznoy NV mobile phone store in Moscow, Russia, on Friday, Feb. 27, 2014. In the slowing Russian economy, the Internet industry has stood out as a rare source of growth. Photographer: Andrey Rudakov/Bloomberg via Getty Images
Photograph by Andrey Rudakov — Bloomberg via Getty Images

As any westerner who’s lived in Moscow will tell you, Russians know the value of attacking from multiple directions. They still haven’t tired of complaining that the western Allies were too slow to open a “Second Front” against Nazi Germany in World War 2.

On Friday, they opened one of their own against Google Inc. (GOOG).

The news agency Interfax reported that Russia’s antitrust regulator, the Federal Antimonopoly Service, has started a probe into the company at the request of its biggest local competitor in internet search, NASDAQ-listed Yandex NV (YNDX).

Yandex claims that Google is increasingly using its control of the Android operating system (the market leader in Russia) to shut out rivals to its other services such as streaming, maps and mail.

That complaint has already featured prominently in the European Commission’s long-running investigation into Google, in which some of its competitors have called for the Mountain View, Ca.-based company to be radically broken up. Yandex has also made submissions to that probe.

“The openness of Android belongs to the past,” Interfax quoted Yandex’s complaint as saying. “The main installations on Android have become a closed package of Google Mobile Services technologies, including Google Play and a range of other components. The dependence of smartphone producers and developers on GMS has grown so much that Google can dictate the rules of the game. If producers don’t agree to migrate their devices to Google services, in particular, by making Google their default search engine, they can lose access to components of the Android platform, on which the success of their phones depends.”

Yandex backed up its claim by saying that three makers of smartphones, Fly, Explay and Prestigio, had told it last year that Google had stopped them from pre-installing Yandex services on their devices last year.

Currently, Google’s share in mobile search on Android platforms in Russia is just under two-third, with Yandex having almost all the rest. Over 80% of smartphones in Russia run on Android, according to some estimates, and it remains the OS of choice for many of the budget phone makers who are hoping to build their market share in an environment where consumers have less money to spend on fancy gadgets.

The ruble has lost nearly half of its value against the dollar in the last year due to the drop in oil prices and the impact of western sanctions on the Russian economy. That has hit Yandex hard too–its shares have fallen by over 60% since the start of last year.

Interfax quoted the FAS’s head of IT issues as saying that Russian law would allow it to insist on Google dropping clauses excluding competitors’ services, but he didn’t mention the possibility of any more extreme actions such as forcing it to formally separate search from other businesses.

A spokesman for Google wasn’t immediately able to comment.