High tech reverberations from the St. Petersburg International Economic Forum

High tech reverberations from the St. Petersburg International Economic Forum
Russian technology and e-commerce are by far the most vibrant parts of the economy. The best and brightest were on show at this year's St Petersburg International Economic Forum. / WIKI
By Adrien Henni in Paris for East West Digital News June 15, 2021

A notable part of this year’s St. Petersburg International Economic Forum (SPIEF) was dedicated to IT and digital transformation as well as the state’s role in these fields (see the forum’s topical sessions and its special Innovation Space). This major event took place on June 3-4, gathering much of the country’s political and business elite and some foreign partners.

In the sessions where digital business and ecosystems were discussed, officials intertwined with businessmen, including representatives of such players as Yandex, Sber, Google,

E-commerce market in Russia is expected to triple by 2025, Ozon CEO Alexander Shulgin tells CNBC’s @_HadleyGamble from the St. Petersburg International Economic Forum pic.twitter.com/kJbIeQOada

— CNBC Middle East (@CNBCMiddleEast) June 3, 2021 and Skyeng.

Never had digital topics been so abundantly discussed in the previous editions of this event, notes The Bell, even though the main talking points revolved around the economy and state policies.

“In the last quarter alone, eight laws related to this field were drafted or passed, with a fundamental impact on business,” The Bell quoted a participant as saying on the sidelines of the forum.

Almighty government

At the Sber business breakfast, Deputy Prime Minister Dmitry Chernyshenko — who is in charge of everything related to the digital economy in the government — made intriguing remarks: he said that the state would have the capacity to compete with business, had it such an intention, due to the fact that it has an extremely large amount of data in its hands.

“We learn from business, we become dangerous for business if we start competing, because we have an administrative lever and exclusive access to data, in addition to technological advancement — but, of course, the government will not use this advantage,” he was quoted as saying.

An important session of the forum, on the second day, was dedicated to the sovereignty of the Russian Internet, its potential isolation and cybersecurity. Digital Development minister Maksut Shadaev called for a transition from data security “on paper” to real one: “If the technological sphere does not provide a sufficient level of comfort and safety, investment efficiency in this field will be extremely low,” he stated.

Noting that, according to surveys, more than half of Russians assess the security of their data as low, the minister believes that state intervention is a necessity. Government action is also justified by the absence of rules at the international level, and the failure of social network to address content issues.

Thus, it is normal that governments demand the removal of prohibited content, said Shadaev — who conceded, meanwhile, that state agencies should on their side pay “as much attention to information security as to fire safety.”

It is also important to constantly explain to people why state intervention is necessary, so that they support the authorities’ effort to regulate the IT field, Shadaev said.

For the first time this year, the Russian Prosecutor’s Office had its own booth at the St. Petersburg International Economic Forum — an unusual, but not fully surprising expression of the interference of repressive bodies in certain aspects of Russia’s business life.

Fake ecosystems?

In a session on ecosystems and regulation, Max Hauser, who leads Boston Consulting Group’s ‘Technology Advantage’ practice in CIS in Russia, made thought-provoking remarks about digital ecosystems: 85% of them across the world will die, he reminded, citing a BCG study.

As for Russia, there are no ecosystems at all, he said: Yandex is just starting to build its own one while Sber’s services are not integrated enough to be called an ecosystem. [Editor’s note: One may also wonder to which extent the Russian venture market really exists, if judging by its very tiny size — some $700mn in 2020, which is around 10 times as less as in France or 220 times as less as in the USA.]

In general, believes Hauser, an ecosystem should not just meet basic needs like food and movement, but complex ones, built around family, health and personality.

Hauser went as far as questioning the strategy of Russian “banks and companies” — an implicit reference to Sber — which invest in the development of digital ecosystems while their primary role is to preserve citizens’ savings.

“Why, instead of saving and remunerating the population’s money, do they speculate with it in an area where business is expected to fail in 85% of cases?” he asked.

Social guarantees for the self-employed

In another session, Yandex, Ozon and Skyeng discussed with government members some issues related to the self-employed workers of digital platforms. Labor minister Anton Kotyakov boasted about the growing numbers of self-employed in Russia — which reaches now 2.4mn people, up 1mn in just eight months. But he warned that the self-employment status posed problems, which translates into “growing tensions” between platforms and contractors.

The absence of social guarantees and vacations are among the most acute issues, he said. “There are two options to address the lack of social guarantees: either mandatory state decisions or voluntary measures. It seems we need something like a voluntary insurance system, which would allow citizens to choose for themselves,” the minister said.

While supporting the idea, platform representatives said it is unlikely that the self-employed will be willing to pay extra contributions to the state pension fund. Yandex Deputy CEO Tigran Khudaverdyan pledged the platforms will help promote insurance systems — and even potentially cover a part of the insurance cost.

Kotyakov liked the idea. According to him, the growing competition between platforms will drive them to consider “some kind of co-financing,” and “create additional guarantees” for those working with them.

Russian startups invited to the UAE

Foreign speakers (even remote ones) were extremely few at the forum. Among those from the tech investment field was Faris Sohail Faris Al Mazrui, Head of Mubadala’s Russia and CIS Investment Program. This sovereign wealth fund has involved itself in several joint projects with Russia for the past years.

In a session about “The venture economy in developing countries”, Al Mazrui boasted the UAE were “a beacon of innovation and stability” in the Middle-East. Headed by “a great leadership” who knows how to “distinguish the possible from the impossible,” the Emirates have “everything new by the latest word in technology:” this is an “inspiring place” that “fills you with energy,” he claimed, as witnessed by the plethora of tech companies from all nationalities coming there.

He praised, in particular, the talent of Russian engineers and tech entrepreneurs, saying they are welcome in the UAE and citing the example of Telegram — this global instant messenger founded by Russian Pavel Durov, which operates internationally from its headquarters in the Emirates.

As reported by Sber, the panelists of this session also discussed the likelihood of other countries squeezing out the leaders (the USA and China) in terms of unicorns and which countries were capable of doing so; which industries were more likely to see the appearance of new unicorns; at what moment should a startup start thinking about entering international markets; where to seek funds at various stages; and what should businesses expect from the state when it comes to developing venture entrepreneurship.

Also at the center of attention was the question of large companies purchasing startups and whether that is good or bad with regard to business culture and competition. The discussion of these issues drew on examples from Russia, the USA, China, Singapore, the UAE, India, and other countries.

Industry announcements

Russia’s digital majors used the forum as an opportunity to make a variety of announcements. To cite just a few examples with an international dimension:

Skolkovo Foundation, which manages a giant tech hub on the outskirts of Moscow, signed a cooperation agreement with the Qatar Financial Center. The latter will provide “market entry support” to Skolkovo resident companies — including discounts for office rental, finding partners, etc. (read more);

Skolkovo also signed and a memorandum of understanding with the Qatar Science and Technology Park, aiming to “expand cooperation and mutual support for projects in such areas as biomedicine, information and communications technologies, cybersecurity, energy, healthcare, digital technologies, and environmental protection” (read more);

BI.ZONE, a Sber affiliate dedicated to strategic management of digital risks, concluded a partnership agreement with the Qatari IT company Meeza. The parties “plan to develop cooperation in providing managed security services in Qatar, with plans to launch pilot projects and jointly promote products and services of the two companies in the country” (read more);

A three-party agreement was signed between Sber, VEB.RF and Google. The agreement covers such areas as “the implementation of joint projects for SMEs and self-employed persons; the organization of joint seminars, lectures, and case studies; exchange of experience with regard to the implementation of innovative IT in the work of SMEs and self-employed persons.” This agreement comes as a development of ‘BusinessClass,’ a free online program launched by Sber and Google five years ago. Sber claims “almost onemn participants started over 14,000 new businesses in various parts of Russia [under this program], creating 58,000 new jobs and paying 45bn rubles in taxes to budgets of all levels” (read more);

Sber and Volkswagen Group Rus signed a memorandum of understanding to “develop cooperation in new industries and sectors,” including in the field of tech innovation. In particular, “Sber will be able to provide […] its cloud tech-based and AI-powered solutions [to enhance] the Volkswagen Group Rus vehicles.” The MoU also covers “startups and research and development around electromobility infrastructure” (read more);

Sber also agreed with the authorities of the Kemerovo region (also known as Kuzbas) to create a new ’School 21— following three establishments launched since 2018 in partnership with French next-gen IT academy Ecole 42. “Now, leading tech companies are vying for School 21 graduates, which guarantees them jobs and captivating projects on the digital technology frontier. It has turned out that the need for this education format was beyond our boldest estimates among regions and businesses across Russia,” stated Sber CEO Herman Gref (read more);

Russia’s sovereign wealth fund RDIF, together with unnamed peers from the Middle-East, announced an investment in Dostavista, an international crowdsourced delivery service with Russian roots. Founded in 2012, Dostavista is among the international leaders in its field (read more).



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