Expert opinions, TECHNOLOGY

Russia, China, USA: how the largest world economies build digital platforms

Rapid development of communications, big data technologies and cloud computing has led to the fact that in the economies of the largest countries the world began to form a full-fledged digital layer. In a digital environment various channels, from voice to chats, social services and payment services are closely intertwined and connected. Such convergence occurs everywhere: for example, in Russia you can buy easily a plane ticket without leaving the banking application, while paying through “Public Services” app for many services. But the degree of integration of “everything with everything” is still fragmentary. Nevertheless, there are states, primarily the United States and China, which headed for creating digital superplatforms. This phenomenon is called “platform economy”.

What is a platform economy?

The platform economy is a new economic model that assumes that all economic and social activities in the country are conducted on the basis of online systems and comprehensive digital platforms.

The advantage is that there are typical off-the-shelf solutions for user interactions, whether civil servants, business or individuals, as well as for mutual settlements of the parties. Examples of such platforms are ecosystem services like Alibaba, Amazon, Uber, Airbnb, Baidu and others. An example from Russia is the rapid growth of Yandex Go, Ozon and Wildberries.

Either the state or private companies with state participation control the platforms. Transmission of the “circulatory system” of digital economics exclusively in private hands is simply impossible, as it is contrary to national security interests. Therefore, around the world digital platforms are somehow controlled in public interests, including China, the United States and Russia. Even American private companies, such as Tesla or Google, perform many government and even defense orders, so they are not so independent as many people consider them. Similar processes occur in Russia: example of successful business with state participation is Rostec, not to mention giants such as Yandex or VK, which also work in the interests of the country.

What are the advantages of the platform economy? It contributes to accelerated digital business transformation, economic well-being growth and development of society. Connecting to ready-made platforms saves business time and money to launch its own services, and the state gets a strong domestic market and has the ability to control the economy so that it becomes more transparent. Users get access to convenient and modern online services, the demand for which during and after a pandemic continues to grow rapidly.

China vs USA

The creation of a platform economy is carried out by all countries that plan to play any meaningful role in the global economy in coming years. These are China, the United States, the countries of the European Union, India and, of course, Russia.

However, there is no universal model, so each of the regions paves its way to the digital future. The models that are being formed depend from many factors: the political regime, the strengths of local business, culture and mentality, regulatory norms, availability of investments for R&D, development and many other aspects.

In this regard, the experience of the United States and China is interesting, which use the maximum dissimilar models. In China, the development of the platform economy is underway centrally: there are government ambitions for the country to enter the top digital economies of the world, which are supported by huge investments. As a result, IT-business becomes the executor of the public order: this is how all competitive technology segments are born in this country, from electric vehicles to 5G communications. Behind each of them is the state and billions of yuan invested by it. All processes are “digitalized” in China, including the social sphere (how it works and how the digital rating of residents is implemented, we all learned in pandemic time).

And if the “digital” in the PRC is planted by a strong state hand, then the United States try to implement the process “democratically.” The US approach is, that the market is as open to innovation and venture capital as possible. It attracts to the country capital, not only monetary, but also intellectual one, from all over the world. In offices of Silicon Valley “stars” are born: those who have to become new Amazon, YouTube и PayPal. Innovation reels in the atmosphere of maximum creative freedom, but let’s not be naive: once new technology acquires a serious specific gravity, it is immediately taken control of by “democratic” methods. That is, through the introduction of market regulation, establishing the most stringent rules and control over data processing. So it seems that a private company is squeezed from all sides, although formally it is not in poverty.

A striking example is Facebook (its owner company Meta is recognized as extremist and banned on the territory of Russia): just read how many fines and what amounts the company has paid in recent years. That’s hundreds billions of dollars. Evidently, there is no independence of such a business.

What will Russia choose?

For our country, the creation of a strong domestic economy is national task, so that the platform economy is being built no less actively. The Russian model develops along its path, as the arithmetic mean between American and Chinese approach. There is a sufficient number of private developments: Russian social networks and banking superapps are already bringing together millions of users.

On the other hand, the state also plays an active role in digitalization. So, the rapid development of the “Public Service” app made it one of the most modern and convenient cases of implementation of single-window and electronic services governments around the world. There are many government-supported initiatives that are uniquely relevant and convenient for all users: example is Fast Payment System (FPS), service for self-employed “My Tax”, digital voting and the like. I suppose, in the future, we will see the formation of private-public initiatives on further development of platforms for the digital economy.

Those companies that provide communication services, and these are telecom operators, IP providers, corporate video conferencing providers and messengers, over the past year or two, have begun to develop solutions more and more actively. And this development is moving in favor of creating unified communication platforms. It is convenient for a business to receive all services in a single environment: from e-mail to ability to make a video call. Therefore, some of the players, like VK (formerly Group), invests in the development of its solutions. And some will simply buy the necessary puzzle elements for their platforms, as MTS, which recently acquired the Webinar video communication service.

While such ecosystem products are just being formed, companies are checking demand, go through hypotheses to building unified platforms. The most important question is, what will become the “core” of the platform. For business, the heart of such a system can become a CRM system, as it allows you to integrate all communication channels and customer base data. Most likely in the future in the market there will be several such large platforms and users will have a choice.

What are the achievements? In fact, the first steps have been taken. As of August 2022, share of the platform economy in the structure of Russia’s GDP has already exceeded 1.5%, and the number of platform workers reached 6% of the economically active population (about 5 million people). All these people are working in rapidly developing sectors – telecom, IT and finance, creating the basis for further welfare of the country. Will the state support the development of such platforms and their integration with digital e-government platforms? Probably, yes, although now is a time of great uncertainty for forecasts of any kind.

Time will tell.

By Ivan Pavlov, Telfin Project Manager

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