Will Europe’s Privacy Concerns Affect Google Inc (GOOG)?

If the Russian government feels that U.S. companies like Google and Microsoft are a national security risk due to their invasive data collection practices, there is a good chance that Putin will make new laws that favor non-U.S. firms like Yandex NV (NASDAQ:YNDX).

The Financials

Yandex’s financials are backed up by strong product growth. It released its own browser and operates one of the larger alternative Android stores. Also, in the mobile sphere Yandex NV (NASDAQ:YNDX) is the default search engine on all Windows 8 devices in Russia, Turkey and the CIS states. The company has no debt, a profit margin 29.8%, an earnings before interest and taxes (EBIT) margin of 38.2% and a return on investment (ROI) of 23.5%.

Google Inc (NASDAQ:GOOG)’s and Microsoft’s financials are not weak. Google’s profit margin of 20.9%, EBIT margin of 25.3%, and ROI of 14.3% are lower than Yandex’s, but still strong. Microsoft isn’t as dependent on the internet and it has a profit margin of 21.6%, an EBIT margin of 28.9% and a ROI of 18.5%. Overall Google and Microsoft are two profit tech giants, while Yandex is the smaller and higher margin player.

Conclusion

Europeans don’t like the idea of America’s PRISM program, but they are only threatening big tech companies with fines of a couple million euros. For tech giants like Google and Microsoft these fines are minuscule and will have little material impact. In the wake of recent privacy allegations the Russian search engine Yandex may be the real winner. Given the Russian’s governments aggressive stance toward the U.S., it is very likely that it will introduce policies that favor local firms and hurt U.S. firms with strong ties to the NSA.

Joshua Bondy has no position in any stocks mentioned. The Motley Fool recommends Google and Yandex. The Motley Fool owns shares of Google and Microsoft. Joshua is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Will Europe’s Privacy Concerns Affect Google? originally appeared on Fool.com is written by Joshua Bondy.

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