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Multi-sided Emerging Markets and Platforms: A Case of Russia Sergey Yablonsky
Associate Professor, Information Technologies in Management Department,
Graduate School of Management
St.Petersburg State University
Volkhovsky per., 1-3
199004 St. Petersburg, Russia
Multi-sided Emerging Markets and Platforms: A Case of Russia
ABSTRACT
The aim of this paper is to develop the MPS Ontology and to research the challenges related to the ways of advancing management of multi-sided platforms within local and multinational firms that have subsidiaries spread across cultures and economic regions and the means of innovating through their use.
Specifically, the focus is placed on understanding how national and multinational firms can deploy existing MSPs that it would lead to the creation of strong competitive advantages and innovative way of operating for international expansion to the emerging markets with the specific emphasis on Russian MSPs (Russian Yandex, moikrug.ru, mail.ru, ozon.ru, molotok.ru etc.). Also, the objective is to compare those with developed market MSPs (Amazon, eBay, Google, Apple, and Facebook) and undertake the critical analysis of their differences. The paper explores challenges and opportu- nities that arise in construction of local MSP’s competitiveness in Russia: both for competitiveness policies and for MSP management.
Word count: 5000
1. Introduction The Internet has become the most important medium for information exchange and the core communication environment for business relations, as well as for social interactions. It is ex- pected that the number of Internet nodes (computers, terminals, mobile devices, sensors, etc.) will soon grow to more than 100 billion (Current Internet Limitations, 2011). Digital technolo- gies, including the Internet and other related technologies, are changing the way the companies do business. As a result, new ways of doing business in the digital economy have been opened up. Digital or electronic business (e-business) conducts business through electronic networks, being one of the most innovative sectors of the global economy. E-Business usually refers to a business conducted over the Internet, but in general, any network, public or private, can be included. E-Business is a term that has a broader definition of e-commerce, which includes servicing cus- tomers, collaborating with business partners and conducting electronic transactions within an organization, as well as buying and selling. Digital business is increasingly important in our networked world of global transactions and global competition (Mehdi Khosrow-Pour, 2006). Innovative multi-sided network platforms (MSPs), which bring together two or more interde- pendent groups of affiliated customers, have recently risen to economic and business prominence in many industries (Armstrong, 2006; Caillaud, and Jullien, 2003; Eisenmann, Parker, and Alstyne, 2006; Evans, Hagiu, and Schmalensee, 2008; Hagiu, and Wright, 2011; Peitz, and Waldfogel, 2012; Rochet, and Tirole, 2003, 2007). Payment systems are classic examples of shared cost-reducing MSPs: they provide an infrastructure which significantly eases transactions between buyers and sellers by eliminating the need for barter. Our first goal is to be able to talk about e-business MSPs services across different markets in a general way and about e-business innovation services in particular. Having a common language in turn makes it easier to visualize MSPs innovative services using a common set of representa- tion techniques. Good representation of MSPs can help to illuminate important dimensions of a problem—in our case, to understand and classify MSPs ecosystem in Russia. There are known several ways of representing MSPs and their architecture: network graphs, design structure ma- trices, layer maps, ontologies (Baldwin, and Woodard, 2008; Osterwalder, and Pigneur, 2002; Ya- blonsky, 2010, 2013). These representations originate in different literatures and draw attention to different aspects of the phenomenon. We illustrate, analyze and classify representation of MSPs by means of lightweight ontologies – taxonomies. The second goal of our research is to capture the common core of different approaches to facili- tate research in MSPs. Thus we illustrate how the MSPs taxonomy can be complemented by the real instances in the emerging market of Russia. Innovative MSPs in Russia are in the early phase of development, and the research in this field will bring more understanding of the Russian e-business market perspectives in the next decade. The qualitative research presented in this paper aims to collect and analyze quality data regarding the current status and prospective evolution of services offered by Russia’s leading e-business companies that are running businesses in the e-business sector. The analysis proposes classifica- tion and examination of the current status of network MSPs, and possible ways of further evolu- tion of e-business technology and services both for the companies and their customers. The analysis methodology incorporates information from different but interrelated sources that form a representative sample of the domain:
– Reported and observed trends and e-business activity. This study incorporates data from 2001 up to 2012 from Internet (blogs, web conferences, etc.). – E-business services briefings, press releases, market and company’s reports and other pub- licly available information. – Research and text books, published from 2001 up to 2013. – Open ontologies and taxonomies including e-business, finance and service domains. We discuss: – General and Russian network MSP’s ecosystem ontology and business landscapes. – The methodology, classification and organization of domain concepts, validation issues, and the first pilot version of MSPs ontology/taxonomy. – The main challenges related to the ways of advancing management of multi-sided platforms within local (Russian) and multinational firms. – Comparison and critical analysis of developed market MSPs (Amazon, eBay, Google, Apple, and Facebook) and local market MSPs (Yandex, moikrug.ru, mail.ru, ozon.ru, molotok.ru etc.) differences. – Conception of ‘place-based’ MSP’s competitiveness in Russia: both for competitiveness poli- cies (including government policy) and for MSP management. Finally, we summarize the main results of the study. 2. E-commerce in Russia A PricewaterhouseCoopers (PwC, 2013) recent report says online retail in Russia went up from $3.5 billion to 10.4 billion despite the poor e-commerce logistics and infrastructure across the country and traditional dislike towards online purchases. The new research figures reveal Moscow and Saint Petersburg account for over half of all online purchases in Russia. Muscovites and residents of the Moscow region account for 45 per cent of all purchases, while residents in Saint Petersburg and its region account for 11 per cent. The volume of trade, however, is far from those in US and China, but nearly level with Brazil and India. The number of internet users in Russia approached 60 million by the end of 2012 – almost half of the country’s population. Russian e-commerce will triple in volume over the next three years from $12 billion in 2012, to $36 billion by 2015, Morgan Stanley forecasts in a report (Morgan Stanley Research, 2013). Internet purchases will make up 4.5% of all retail sales by 2015, according Morgan Stanley’s estimates. In 2012 online retail in Russia accounted for 1.9 % of the total retail trade in the country ($670bn). Meanwhile, Russia’s leading internet company Yandex considers the country’s online market has even more potential for growth than Morgan Stanley estimates. “Morgan Stanley only takes into account online sales; in reality the e-commerce market in Russia is much bigger. Retail is only the third most popular online purchase, there are also payments for internet, cell phone services, buying tickets online, games and social networks,” mentioned Evgeny Maleev, Head of e-commerce, Yan- dex.Money (RT, 2013). Yandex is a search network MSP, Russian Google. Company is set to benefit from this growing trend – as 87% of online consumers use this method to research their purchases (Morgan Stanley Research, 2013). According to the Morgan Stanley report online retailer Ozon.ru is the absolute leader of the country’s online business. Its revenue jumped 91% in the first half of 2012
to $232mn and is expected to reach $1bn in 2014. The report also named Avito (online classified ads), KupiVIP and Lamoda (clothes, shoes and accessories), Biglion (collective shopping),), Game Insight (mobile games), Wikimart (online retailer) and AnywayAnyday (flight booking) among the major players in the Russian e-market (Morgan Stanley Research, 2013). Mostly all of these companies are MSPs. The second review MoneyTreeTM (PwC, 2012) analyses venture investments in Russia for the three quarters of 2012 in the IT sector and states that 6 deals (including IPOs), involving over USD 50 mln each, were concluded in Russian MSPs. Investment in these deals totalled USD 1.9 bn. These are milestones for Russia’s venture capital market. “The Russian internet will experience a real boom once a sufficient number of players comparable in size to Ozon, Mail.ru, Yandex appear on the market and start to compete in various areas of activity, including the purchase of technolo- gy/startups. This is a medium-term prospect: two to four years. The rapid development of the venture capital market also requires that the existing, established corporations come to understand that technology purchasing can deliver breakthrough growth.” said Victor Belogub, Director, Venture capital, VTB Capital (PwC, 2012). 3. Theoretical background Terms multi-sided market, two-sided market and platform-based market are used sometime inter- changeably. We shall use such definition (Evans, 2003; Evans, Hagiu, and Schmalensee, 2008 ): a multi-sided market exists, when at any point in time there are a) two or more distinct groups of customers; b) the value obtained by one kind of customers increases with the number of the other kind of cus- tomers; and c) an intermediary (see fig.1) is necessary for internalizing the externalities created by one group for the other group. We consider such different types of intermediaries in MSPs and markets (Evans, 2003; Evans, Hagiu, and Schmalensee, 2008 ): − Exchanges. − Advertiser-supported media. − Transaction systems. − Software platforms. The role of an intermediary (Evans, 2003; Evans, Hagiu, and Schmalensee, 2008 ) is − to minimize transaction costs through matchmaking and audience making. − to minimize costs through the elimination of duplication. − to permit value-creating exchanges that would not take place otherwise. Products and services that bring together groups of users in multi-sided markets are multi-sided platforms (Järvi, Schallmo and Kutvonen, 2011; Peitz, and Waldfogel, 2012). During last decade the literature has constantly struggled, however, with a lack of agreement on a proper definition: for instance, some existing definitions imply that retail firms such as grocers, su- permarkets and department stores are multi-sided platforms (MSPs).We argue that only proposed
(Hagiu, 2006; Hagiu, and Wright, 2011) definition provides a more precise notion of MSPs by re- quiring that they enable direct interactions between the multiple customer types which are affiliated to them. MSPs include organizations such as American Express, Visa, MasterCard, eBay, Facebook, Apple, Mall of America, Match.com, Skype, Sony PlayStation, Vogue magazine, Yellow Pages, and YouTube, in their current forms (Hagiu, 2006; Peitz, and Waldfogel, 2012). The driving force be- hind multi-sided markets is the need to induce coordination among two or more groups of affiliated customers, and what they coordinate on is precisely a fixed point in the architecture of transactions in which they collectively participate (Baldwin, and Woodard, 2008). That fixed point may be a particular service, for example the Visa payment-processing service, which both issues cards to consumers and approves transactions on behalf of merchants. Finally, all platforms of services or products exhibit tensions between platform owners and complimentaries. These tensions are vari- ously expressed. For emerging market’s MSPs the main threat is disintermediation: by replicating the platform side services, rivals may be able to clone the platform itself and compete with it directly (Yablonsky, 2013). In two-sided and many-sided markets the value creation and appropriation logic is different (all sides represent cost and revenue), the linear and transitive value chain and value creation thinking is outdated. Often this duality of both sides representing cost and revenue is neglected and the other side is treated as a profit on and the other either as loss or financially neutral (Järvi, Schallmo, and Kutvonen, 2011). We argue that the some part of Russian e-business sector innovations are open innovations or open service innovations (Chesbrough, H., 2006, 2011), especially e-money MSPs .
Figure 1. Flows of value and revenue in one-sided and two-sided markets (Järvi, Schallmo, and Kutvonen, 2011)
Good representation of MSPs can help illuminate important dimensions of a problem - in our case, to understand and classify MSPs innovative services ecosystem in Russia. We illustrate, analyze and classify representation of e-business MSPs by means of ontologies. 4. E-business MSP ontology A clear and precise description and structuring of the information in the e-business domain are pre- requisites for a common understanding of the information exchanged among different partners of e-business MSPs. It also fosters semantic interoperability in the context of pan-European data ex- change among public administrations, facilitates electronic interoperability among e-businesses (ebXML, XBRL, FpML) and improves statistics on e-finance. Taxonomies and other types of con- trolled vocabularies are the preferred means to achieve such a common understanding by specifying the terms of the domain, disambiguating them from each other, controlling synonyms, and structuring the domain via term relationships. There are many approaches for the classification of goods, ranging from rather coarse taxonomies, created for customs purposes and statistics of economic activities, like the North American Industry Classification System (NAICS) to expressive descriptive languages for products and services, like UNSPSC/NAPCS, eCl@ss, eOTD, the RNTD (Hepp, 2008) or Financial Industry Business Ontology (FIBO). It is out of the scope of this paper to list and compare all available standards in this area, but one can say that services categorization standards, like UNSPSC, eCl@ss2, eOTD3, or the RosettaNet Technical Dictionary reflect some degree of community con- sensus and contain, readily available, a wealth of concept definitions plus a hierarchy. A taxonomy is comprised of a hierarchy of concepts linked by a transitive subsumption relation (often called isA or subClassOf) whereby each instance of a class can be inferred to be an instance of all parent classes. Taxonomies are strict hierarchies: each class has at most one parent. A lightweight ontology typically consists of a hierarchy of concepts and a set of relations holding between those concepts. If we specify only a hierarchy of concepts related using a subsumption relation, then we have taxonomy. Heavyweight ontologies add classes (concepts), instances (objects) of classes or concepts, attributes (aspects, properties, features, characteristics, or parameters that objects ans classes can have), relations and more (Poli, Healy, and Kameas, 2010).
Ontologies are typically divided into foundational (or top-level), domain and application ontologies (Poli, R., Healy, M., Kameas, A., 2010). Foundational ontologies cover the most general concepts that can be expected to be common to all domains, such as “individuals” vs. “universals”. Domain ontologies are tailored for a specific area of human activity, e.g. medicine or business. Application ontologies further restrict attention to a particular activity in a domain, e.g. a computer-based order handling system in business. Some of foundational ontologies include domain and application knowledge (ex.: OpenCyc, SUMO).
The Semantic Web, a Web with the meaning or Web 3.0, produces new specific XML-based stand- ards for semantics, such as Web Ontology Language (OWL) (http://www.w3.org/TR/owl-features/). It is demonstrated that more expressive forms of semantic structures for knowledge management encompass simpler forms, and extend their capabilities (Küster, König-Ries, Petrie, and Klusch V., 2008). For example, the OWL comprises the ability to represent glossaries, taxonomies, thesauri, subject ontologies, and the semantics of specific XML schemas, database schemas, enti- ty-relationship and UML models.
Deployment and development of ontologies in the domain of innovation e-finance services man- agement demonstrates the applicability of the method to this field and its potential. The methodo- logical insight into innovation ontology development was shown by several researchers (Osterwal- der, and Pigneur, 2002; Bullinger, 2009; Yablonsky, 2010). In various recent works it was demon- strated how the ontology can be used to achieve interoperability between innovation tools and to answer questions relevant for innovation managers that demonstrate the advantages of semantic reasoning (Hepp, 2008; Yablonsky, 2009), has since been the most comprehensive and mature Web ontology for types of products and services. It defines classes for more than 30,000 product/services types and more than 5,000 properties for product/service features.
Figure 2. MSP ontology first level The pilot version of lightweight ontology e-business MSPs ontology (hierarchy of taxonomy con- cepts – is shown on fig.2, a set of relations holding between those concepts – for example: one can relate stakeholders to IT services, stating for example: (developer) develops (IT-service), (customer) buys (IT service), relations IsPartOf, etc., and a set of instances – international and local Russian companies, services, etc.; the total number of all ontology features – 400) is too complex to be rep- resented here in its entirety, but an example of taxonomy is provided in order to demonstrate both the process of classification and the intermediate result. 5. Search MSPs in Russia There are three main search network MSPs in Russia (Source: Liveinternet, July 2012): Yandex – 60.4 % search market share in Russia, Mail.ru – 8%, Rambler – 1,4% plus Google – 26,7%. Russian search network MSP Yandex (http://www.yandex.ru/) – world-class technology & Internet leader – has based its business model on advertising revenues. The company placed its first adver- tisement in 1998 and launched Yandex.Direct, its auction-based context advertising placement ser- vice, in 2001. Today, advertising accounts for more of 97% of the company’s revenues, including
almost 90% for text based advertising. Until 2008, Russian sites participating in AdWords, Google’s advertising network, were paid by checks sent via snail mail, but, by contrast, participants in the Yandex ad network could get their money in one click using Yandex.Money, the company’s own e-currency. With Yandex.Direct, the company has become the absolute leader on the Russian con- textual advertising market, with a market share of approximately two thirds on average over the last two years, but reaching up to 80% in certain periods. The company’s business record on the international scene has been modest. Yandex dominates the search market only in Russia. It maintains a strong presence, but it is far from leadership on neigh- boring Russian-language markets – its market shares range from 25% to 40% on the Kazakh, Ukrainian and Belorussian markets. Its English-language version (http://www.yandex.com/), launched in 2010, earned praise for the accuracy of its results. Yandex launched yandex.com.tr in Turkey in September 2011, with its ser- vices, including web search, maps and email, tailored specifically to the needs of web users in this country. Turkey was the first country where Yandex started operating outside the Russian-speaking commu- nity. Instead of localizing its services, Yandex developed an entirely new product for the local users. Still, Yandex is ranked just 6th among search engines worldwide. Mail.Ru Group is one of the leading Internet companies in Russia. Mail.Ru Group comprises the most popular Russian free-mail service and two major RuNet instant messengers, Mail.Ru Agent and ICQ. The company owns two leading Russian social networks, My [email protected] and Odnoklassniki.ru, and owns a significant share of the Russian social network VKontakte. Mail.Ru Group is also a leading player in the online games market and offers a vast amount of different games (either created within the company or obtained under license) for social networks. Moreover, the Mail.Ru Group portfolio includes dozens of well-known browser and client games, including the company’s own: Allods Online and Legend: Legacy of the Dragons. Mail.Ru Group is also developing e-commerce projects. The major ones are [email protected], a price-comparison service in Internet shops; Trav- [email protected], a leading travel portal that allows customers to book tickets and travel packages online; [email protected], a resource with a large number of subject-related services for both real estate brokers and individuals. The [email protected] payment system, a convenient and quick way of paying for goods and services, is also worth mentioning. Mail.Ru Group holds 21,35% share of one of the largest Russian payment services - "QIWI". Mail.Ru Group also owns minority interests in the global social network Facebook Inc. (2.25%), in Russian social network "VKontakte" (39,99%), in Zynga Game Network Inc. (1.16%), in Groupon Inc. (4.21%), and in a number of small Russian and Ukrainian internet companies, including e-commerce platform B2B-Center (JSC "Economics De- velopment Center"). 6. E-finance MSPs in Russia The Russian banking sector includes 944 banks that currently operate in Russia, while dominated by state-owned giants Sberbank and VTB, and the regulator, Russian Central Bank. Russia’s big- gest banks by asset are: Sberbank, VTB, Gazprombank, Rosselkhozbank, Bank of Moscow, VTB 24, Alfabank, Unicredit Bank, Raiffeisenbank and PromsvyazbankForeign banks success stories about entering the Russian market include Societe Generale, UniCredit and Raiffeissenbank. The Russian banking sector has huge potential for growth, with Credit Suisse estimating that as little as 24% of Russians have bank accounts. More and more financial companies in Russia now operate in
a two-sided market instead of a traditional one-sided market. The e-finance MSP ontology (Ya- blonsky, 2013) is shown on fig.3. 6.1. Banking and e-banking in Russia The Russian banking sector includes 944 banks that currently operate in Russia, while dominated by state-owned giants Sberbank and VTB, and the regulator, Russian Central Bank. Russia’s big- gest banks by asset are: Sberbank, VTB, Gazprombank, Rosselkhozbank, Bank of Moscow, VTB 24, Alfabank, Unicredit Bank, Raiffeisenbank and PromsvyazbankForeign banks success stories about entering the Russian market include Societe Generale, UniCredit and Raiffeissenbank. The Russian banking sector has huge potential for growth, with Credit Suisse estimating that as little as 24% of Russians have bank accounts. 6.1.1. E-finance innovation services MSP (Alfa-Bank case) Global Finance announced one of the largest private banks in Russia, Alfa-Bank (http://alfabank.ru), as the best consumer internet bank in Central & Eastern Europe 2011. It was selected basing on the following criteria: strength of the strategy for attracting and servicing online customers, success in getting clients to use web offerings, growth of online customers, breadth of product offerings, evidence of tangible benefits gained from Internet initiatives, and web site design and functionality. Retail business has always been a priority for Alfa-Bank (http://alfabank.com/retail/). At the end of 2009 the total balance on individuals` accounts with Russian banks reached USD 247.5 billion, in- cluding USD 207 billion of term deposits. At that time, in Alfa-Bank term deposits received from individuals up to USD 4.037 million. If we exclude the funds obtained via the integration of Sever- naya Kazna bank, Alfa-Bank's market share in terms of cumulative balances grew from 1.35% to 1.75%. At the beginning of 2009, Alfa-Bank ranked number seven in Russia in terms of the funds attracted from individuals. By the end of the year it had moved into sixth place. During the report- ing year, the total number of customers using Alfa-Bank's settlement and deposit services increased by 19% (up to 2.571.000). The total retail customer base across all operating segments increased by 27%, reaching 3.895.000 in 2009. This combined with a 5% reduction in staff resulted in a substan- tial improvement in the efficiently of the Retail Bank. The crisis sparked an increase in the popular- ity of credit cards among customers, increasing Alfa-Bank's credit card portfolio from USD 179 million to USD 218 million, while the number of customers using credit cards increased from 154.000 to 186.000 in 2009. Alfa-Bank has a set of financial services that form financial MSP: − e-banking service; − e-acquiring; − e-Money; − m-banking; − E-Trading; − Credit cards; − Web 2.0. o E-payment MSPs
E-money or e-currency is stored value or prepaid payment mechanisms. The difference between e-money and e-banking is that with e-money, balances are not kept in financial accounts with banks (Yablonsky, 2013). All purchases are provided by online or mobile services. From 13% to 17% of online purchases in Russia are made using electronic currencies, and less than 20% are made with bank cards. According to Electronic Money, an industry association founded in 2009, the Russian electronic payment market, not including payments made with banking cards, reached 70 billion rubles, or $2.5 billion, in 2010, and is expected to double this year.
Figure 3. E-finance MSP ontology two levels partly (Yablonsky, 2013) The Russian population is not unbanked, yet rather conservative about using their bank cards – about 90% of card transactions are withdrawals. There are widespread security concerns about us- ing cards to pay online, and cash-on-delivery remains the most preferred option. Electronic curren- cy enjoys increasing popularity, including for buying from abroad. Consumers can fund their e-wallets, commission free, by linking a credit or debit card, or top up through ATMs, or via Inter- net banking. Cash top-up is available through a large and growing network of cash-in payment ter- minals throughout the country, at partnering retail points, bank offices, or via various money trans- fer services.
Russia counts plenty of payment means, however, many problems are still left unresolved: – Users still lack trust. This is why banking cards are rarely used for online payments and Cash on Delivery (COD) is widely used in e-commerce. The lack of trust can also affect SMS payments due to a number of swindling offers. – Alternative solutions for online payments complicate user experience. Using electronic cur- rencies requires several, sometimes uneasy, steps. Offline terminals are user friendly but in- terrupt the online buying experience. – Users and/or merchants are often charged with significant fees. Fees are unreasonably high with telephone-based payment means; they can be significant with offline terminals and electronic currencies as well. – Pre-authorized, recurring payments are possible only in few cases and are still used very rarely. This complicates the business model of several industries. – Merchants have to aggregate a great number of payment solutions, which leads to complex processes or to the necessity of paying for additional aggregation services.The main Russian electronic currency operators are: WebMoney, Yandex.Dengi , RBK Money, MoneyMail, Cyberplat, Rapida. Russian MSPs Yandex.Dengi (Yandex.Money) and WebMoney are the two top Russian operators. In 2010, the number of e-wallets in Russia grew by 50% (Source: Russian Electronic Money Asso- ciation, March 2011). According to the latest research, 78% of the online audience have heard of Yandex.Dengi , and 61% have made one or more payments with Yandex.Dengi during the last six months (Source: TNS Media Research, Moscow audience, aged 18-45, February 2011). The Yandex.Dengi e-payment system was founded in 2002 to enhance commercial effectiveness in the Internet industry and is a 100% subsidiary of Yandex, the leading Russian-language search en- gine. Yandex.Dengi is the first e-payment system in Russia that allows users to fund their e-wallets by linking a credit or debit card, at no commission. In 2011 Yandex.Dengi successfully launched service in the Commonwealth of Independent States. Users from Ukraine, Belarus, Kazakhstan, and other CIS countries are now eligible to use Yandex.Dengi. The service is without commission, but for security reasons Yandex is currently limiting purchases to 5,000 rubles per day and 30,000 ru- bles per month ($172 and $1,034, respectively). For legal reasons, the service is not available to non-residents or to holders of cards issued by banks that are not registered in Russia.
6.2. Web 2.0 e-payment services MSPs Russian social networks Vkontakte and Odnoklassniki launched their internal currency in 2011. Now users can pay for virtual and real network offered goods using social networks virtual curren- cy. Vkontakte had created a merchant API, that allows users to click on the button to have the goods they like on the merchant sites added to their wish-lists on their profiles inside the network (http://valuedrivenbanking.blogspot.com/). And later these items could be purchased through a spe- cial sequence with money deducted either from a credit card specified by the user, or from his vir- tual currency account. For that matter, Vkontakte offered a special top-up scheme with QIWI cash kiosks. Vkontakte network has recently passed through a strict PCI DSS certification process. Now it is used to store payments cards data that allow the customers to pay through banking cards. Al- most the same has been offered by Odnoklassniki where the linkage of cards is supported by Al-
fa-Bank. It is interesting to note that Vkontakte model is similar to the one that LinkedIn has of- fered to its international users. 7. Russian Federal Program "Information Society 2011-2020" and Government regulations In September 2010, the Ministry of Telecom and Mass Communications presented the Federal Pro- gram "Information Society 2011-2020". The program builds and expands on various previously adopted regulatory documents and programs, such as the Federal Target Program “E-Russia 2002-2010”, “E-Government” Project (2010) and the conception of the country’s long-term socio- economic development up to 2020. The program lists the following as its principal tasks (Daveluy, 2012): – Raising the quality of life for all citizens and the development of businesses in the information environment. – Developing e-governance and increasing the efficiency of public administration services. – Developing the Russian ICT market. – Building the infrastructure for an information society and bridging the digital divide. – Guaranteeing security in the information society. – Developing digital content and protecting national heritage. The program includes 22 indicators to measure its progress. The key activities of that 2011 year in- cluded the development of e-governance and establishing the infrastructure for e-payments for gov- ernmental services, installing the system for the electronic exchange of information in bankruptcy proceedings, revising a law on digital signature that lifted the barrier preventing the widespread use of electronic signatures in business, and adopting a new law on a national payment system that reg- ulates all types of e-payments (Daveluy, 2012). In summer 2011 the Russian Federation Federal Law No. 161-FZ of June 27, 2011, "On the National Payment System" was signed in by Russian president Medvedev. The law shall regulate the proce- dure for all types of cash payments with electronic money, with the use of new technologies, in- cluding mobile communications. The new law establishes the legal and organizational foundation for the country’s payment system and regulates the procedure for rendering payment services. The law recognizes four types of players who are entitled to offer payment services: − Money transfer companies, including electronic money operators. − Professional securities traders, insurance organisations and the bodies of the Federal Treasury. − The federal mail service. − International financial organizations, foreign central banks and foreign banks. The law concerns, in particular, payments made with bank cards – Russian bank cards market esti- mated to be worth some $90 billion in 2009 – and electronic currencies like Yandex.Dengi and WebMoney, as well as systems for making payments through mobile devices. 8. Findings Such findings identify, classify and describe main Russian MSPs, adoption barriers and challenges for the Russian MSP market segment.
• Developments in the field of Information and Telecommunications Technology have reformed the way with which companies conduct their business in Russia. • Innovative Russian MSPs is a term used to collectively describe many different delivery channels available to banks and other key players in order to attract new customers and retain existing ones. The technological innovations led to the current situation, where a multi-sided customers can perform a variety of transactions less costly without time and location limits by simply using its fixed phone (phone banking), personal computer (PC and Internet banking) or mobile device (either phone, PDA or tablet). • Today there are several examples of successful adoption and implementation of e-business ser- vices in Russia by national MSPs (Yandex, Ozon.ru, Mail.ru, Sberbank etc.) and some interna- tional MSPs (Google, Citi, Raiffeisen Bank International, Forex Capital Markets, Pay Pall) of B2B, B2C and B2G e-commerce and e-banking MSPs in Russia. • The Global companies are providing their MSPs’ services on Russian market. • Because of the multi-homing costs inherent in most existing m-banking MSPs, these platforms introduce both economic and psychological switching costs for consumers. In turn, these switching costs can have the impact of reinforcing existing network effects in markets where the incumbent already holds significant market share for voice traffic. There are a number of options available to telecommunications regulators in responding .to the emergence of m-banking MSPs, and authorities should take a measured approach to achieve optimal societal and industry out- comes. • For emerging market’s MSPs the main threat is disintermediation: by replicating the platform side services, rivals may be able to clone the platform itself and compete with it directly. The current study has examined the landscape, opportunities and challenges of e-business MSPs in Russia from the perspective of e-business key players and from the perspective of customers. Also as the spread of Internet increases it would be useful to measure the spread of MSPs accordingly. The current study also fulfils an important void in the current literature related to the growth of e-commerce MSPs in emerging markets. The MSP ontology will provide a complete and effective framework for describing and managing MSPs with cloud services innovations in the Semantic research area. Also it will support process description and enactment, by means of composition of multiple resources, emerged as a fundamental requirement in the Web and Cloud context. 6. References
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