Bankruptcy of the Russian subsidiary of Google (Alphabet Inc.)

The petition to declare OOO “Google” bankrupt was filed by the company’s management in June 2022. The decision to initiate the bankruptcy proceedings had been made no later than April 2022 by the sole shareholder of OOO “Google” — the U.S. company Google International LLC. Later the representatives to act on its behalf in the proceedings were appointed.

The stated grounds for this decision were the company’s inability to satisfy court judgments entered against OOO “Google” and to pay the turnover-based fines imposed for violations of Russian laws governing the dissemination of prohibited information.

Final court rulings established that, as early as 2018, more than 97% of the revenue generated by OOO “Google” was transferred abroad through transfer pricing rather than retained by the Russian subsidiary. Before 2018, the Russian subsidiary retained approximately 20% of the revenue it generated. No economic justification was ever provided for this more than sevenfold reduction. Then, less than six months before the bankruptcy proceedings were initiated, dividends totaling RUB 9.5 billion were distributed despite the statutory prohibition on such payments during the pre-bankruptcy period. In other words, by 2018, Google had already positioned itself to abandon its Russian subsidiary—along with its employees and counterparties—at minimal cost, if necessary.

In 2020, Google began unlawfully blocking the YouTube channels of Russian media outlets and systematically violating Russian laws governing the dissemination of prohibited information. In 2021, Google’s companies were found to have committed a serious violation of Russian antitrust law. As a result, Google was subjected to turnover-based fines totaling billions of rubles. The courts also imposed escalating coercive fines (astreintes) that would have exceeded Alphabet's entire market capitalization if the relevant court orders had remained unenforced for one year. Even disregarding the funds transferred abroad through transfer pricing, the antitrust penalty and the turnover-based fines alone were sufficient to render OOO “Google” insolvent.

Before filing for bankruptcy in March 2022, OOO “Google” ceased all operations in Russia and unilaterally abandoned its contractual obligations. As a result, hundreds of advertisers and small and medium-sized Russian businesses suffered losses, and their claims were admitted to OOO “Google”‘s register of creditors’ claims. The total amount of registered creditors’ claims against OOO “Google” (excluding current claims) exceeds RUB 22 billion.