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Google Seeks Settlement With Putin Ally as Huge Fines Loom

(Bloomberg) -- Alphabet Inc.’s Google is seeking an out-of-court settlement after a Russian ruling that it must unblock the YouTube account of a TV channel owned by a U.S.-sanctioned backer of President Vladimir Putin.

The Moscow Ninth Arbitration Court of Appeals this week delayed proceedings until Aug. 16, following Google’s request for more time for the two sides to reach an amicable agreement in a court filing seen by Bloomberg. The filing said Tsargrad had approached Google with an offer of negotiations after the lower court ruling in April.

The appeals court on Monday was due to have ruled on that decision ordering the U.S. technology giant to restore the Tsargrad account or face a daily fine of 100,000 rubles ($1,340), which would double each week that Google refuses to comply.

Russia has stepped up confrontation with foreign social media and internet companies in what it terms a campaign to uphold its digital sovereignty. It has levied fines and slowed content in a bid to force them to delete posts encouraging unauthorized protests and other illegal material.

Google has encountered problems in other countries. France fined the U.S. search giant 500 million euros ($593 million) on Tuesday after it failed to follow an order to thrash out a fair deal with publishers to use their news content on its platform.

Looming Fines

Under Russian law, there’s no upper limit on the potential fines against Google in this case. The U.S. company might be able to avoid the levies by restoring the account only inside Russia, though it hasn’t done that so far.

A spokesperson for Google declined to comment on the authenticity of the filings.

Tsargrad, which sought the fines and would receive any collected in the case, is owned by Kremlin ally Konstantin Malofeev. He was sanctioned by the U.S. and European Union in 2014 for allegedly funding the pro-Russian rebellion in eastern Ukraine.

Google said the July 2020 blockage was in response to the “violation of legislation on sanctions and trade rules.” Tsargrad, which says it promotes traditional Orthodox Christian traditional values, had a million YouTube subscribers.

Malofeev described the Russian ruling against Google as “the first time Russia has re-established its digital sovereignty” against such a powerful global player. “This is a company with a capitalization bigger than the GDP of many countries and comparable to the size of Russia’s economy that trespasses on state sovereignty, not only in Russia but across the globe.”

At the time of the ban, Google’s move to block Tsargrad due to Malofeev’s ownership drew a denunciation from the Russian Foreign Ministry as “yet another example of political censorship, a violation of freedom of speech and the principle of equal access to information.”

In court filings, Google cited testimony showing that it could face multimillion dollar fines in the U.S. if it failed to observe sanctions.

Tsargrad didn’t indicate whether it would be satisfied with restoration of the account only in Russia but said it would welcome “any steps aimed at starting implementation of the ruling, though we will push for a full restoration of our violated rights.”

(Updates with French case in fifth paragraph, Malofeev comment in tenth paragraph)

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