Alphabet, the parent company of Google and its Russian subsidiary Google LLC, is facing bankruptcy claims from unpaid vendors in Russia, according to a report by TASS. The vendors, owed millions of dollars by Google LLC, want the division to be declared bankrupt so they can recoup some of their losses through the courts. As of August 2022, Google LLC’s monetary liabilities in Russia amounted to 20.1 billion rubles ($211 million).
Representatives from eight vendors, including Izhevsk Radio Plant and 2GIS mapping service, along with agents from Russia’s Federal Tax Service, attended the creditors’ meeting. It was unanimously decided that the vendors would file an application with the Moscow Arbitration Court to initiate bankruptcy proceedings against Google LLC.
This is not the first time Google has faced challenges in Russia. Since the end of 2021, the tech giant has been under pressure for its failure to remove content deemed illegal by Moscow and for restricting access to certain Russian media on YouTube. As a result, Google LLC has been hit with hefty fines by Russian authorities. In April 2022, it was reported that the company had failed to pay these fines, leading to the seizure of its Russian accounts.
In May 2022, Google LLC announced its intention to file for bankruptcy citing the account seizure as the reason for being unable to pay its staff and vendors. Subsequently, in November 2022, the Arbitration Court of Appeal initiated the first bankruptcy proceedings against Google LLC, placing it under supervision.
Since last fall, more than 1,000 Russian companies have filed legal complaints against Google LLC, primarily related to the company’s failure to provide advertising services, which were suspended following the bankruptcy filing.
According to Google LLC’s earnings report for 2022, its revenues in Russia last year decreased by 82%, amounting to 24.2 billion rubles ($255 million). As of December 31, 2022, the company’s cash and cash equivalents on its accounts totaled 375.5 million rubles ($3.9 million), all of which were seized by Russia’s Federal Bailiff Service at the end of last year. The funds were transferred to the service’s deposit account as an interim measure pending legal proceedings, as reported by Interfax.
In May 2023, Google LLC filed a lawsuit against the Federal Bailiff Service with the Arbitration Court in Moscow, challenging the seizure of its assets.
The situation highlights the ongoing challenges faced by Google in Russia, both in terms of compliance with local regulations and meeting its financial obligations to vendors. The bankruptcy proceedings initiated by the unpaid vendors could have significant implications for Google’s operations in Russia, and it remains to be seen how the courts will rule on the matter.
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