Digital Platforms Set Course to Protect Buyers and Manufacturers

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The new approaches to the work of digital platforms: development of the platform economy, the formation of transparent rules, fair competition, and the protection of buyers' interests, were discussed at the plenary session titled "Trust Economy: Transparent Digital Transactions on Platforms". The event was hosted by the National Centre RUSSIA on 11 November as part of Platform Economy Day.

"Digital platforms are not just business, they are not something ordinary that appeared in the way everything else used to appear. They are representing a fundamentally different way of organising economic activity. Platforms allow optimisation of transaction costs in the economy, they allow to replace some institutions and automate many processes. This provides greater efficiency, leads to structural changes in industries and, in turn, creates a need for regulation. The development of platforms in different industries is going at a different pace. For example, in taxi business, the process of platformisation is largely complete: the share of platforms in the industry is approaching 100%. In trade, platformisation is passing the equator — now we are surpassing the 50% market share mark, and making it bigger through penetration into small settlements and support for small producers. In the social sphere, including healthcare and education, platformisation is only at an early stage — these are the first timid steps to optimise institutional processes," stated Maxim Oreshkin, Deputy Chief of Staff of the Presidential Executive Office of the Russian Federation.

The platform economy has created an unprecedentedly huge digital goods turnover. At the same time, the extensive growth of new business models is being replaced by a new stage, where trust in the quality and origin of goods is becoming a key factor for further development. End-to-end data on orders, returns, quality, and reviews increases transparency, strengthens trust in brands, and simplifies compliance with product safety requirements and consumer protection.

"Marketplace turnover last year exceeded 9 trillion rubles. Now the emphasis is on the words 'control' and 'regulation'. It feels like we are talking about a threat or danger. In fact, nothing terrible is happening. This is the normal evolution of growth. What has happened over the last 3-5 years? Our economy has indeed become highly digital, as we planned. And marketplaces, which represent a digital platform, where buyers and sellers can meet, are convenient and comfortable. It is precisely due to convenience and service that marketplaces have experienced rapid growth in recent years," said Dmitry Grigorenko, Deputy Prime Minister of the Russian Federation and Chief of the Government Staff of the Russian Federation.

He noted that the rules of interaction between sellers and buyers on marketplaces turned out to be non-typical, and existing legislation did not account for many things. The Russian Government, according to him, faced a situation: either apply the norms and rules of the trade law to the already established processes operating on marketplaces, or take into account what the marketplaces themselves devised for the convenience of sellers and buyers.

Dmitry Grigorenko also said that hundreds of thousands of micro-enterprises in Russia are sellers. At the same time, there are several million buyers. Thus, all this cannot exist outside the rules, he added. While working on the law on marketplaces, lawmakers had difficult times discussing all these issues with representatives of marketplaces, sellers, and regulatory bodies, including the question of how to verify participants in the digital environment. Most importantly, the platforms operate according to models that were initially not accounted for in the legislation, so all their features had to be included in the regulation.

The Ministry of Economic Development of Russia initiated the creation of new regulation, said the head of the ministry, Maxim Reshetnikov. During the discussion of the draft law, participants focused on downsides. Among other things, he noted, some lawmakers stated that the economy cannot grow for long with an extremely low unemployment rate — over the past three years, it has fluctuated between 2 and 3%. Nevertheless, growth occurred, and it was largely provided by the platform economy.

"Goods accessibility has increased for consumers across the country. This stimulates demand and strengthens the economic system. The downside of growth is the tendency towards monopolism: an endless number of large product distribution networks cannot exist. Future companies will be niche-based, and they more likely will jointly use infrastructure. Platforms take on the function of market access, and the state could not but intervene. Therefore, many regulatory options emerged. On the instruction of the Government, the Ministry of Economic Development consolidated positions and, together with the Presidential Executive Office, deputies, and senators, developed the concept of the law. Today, the main task is the implementation. Integration with approximately ten major state information systems, including the Federal Service for Intellectual Property (Rospatent), marking system, Federal Accreditation Service (Rosakkreditatsiya), declaration system, and others, is ahead. The work on this is already underway, and, however we are still behind in some areas, but the scale of interaction is enormous," added Maxim Reshetnikov.

In Russia, it is necessary to level the competitive aspects between offline trade and marketplaces. This was stated by Alexei Repik, Chairman of the All-Russian Public Organisation "Business Russia", Honoured Economist of Russia.

"We should try not to 'tighten the screws' on the platforms, depriving them of growth opportunities; instead, we should strive, where necessary, to ease and deregulate the classic offline trade. The President instructed us to form a new national trade model and update the regulation of offline retail. I believe that, as part of this instruction, we definitely must try to level certain competitive aspects between offline trade and platforms," said Alexei Repik.

As part of preparations for the entry into force of the Federal Law "On the Platform Economy" requirements, RWB (Wildberries & Russ) has already implemented a number of its provisions, said Tatyana Kim, founder of Wildberries, head of RWB. She noted that the platform already checks for the registration of sellers of marked goods in the GIS MT (State Information System for Marking) and in the product group. Product cards of such sellers are blocked if registration is absent. The company is working on visualising the requirement for the presence of marking in the product card.

"This way we can convey information about the mandatory presence of marking on the purchased goods to the consumer. We, as a platform, previously complied with these requirements, but now, with this new Law, we have introduced a systemic approach to this work. The company is also participating in an experiment with Rosakkreditatsiya. Over 20 million products have already passed this agency's verification — links to certificates or declarations of conformity are uploaded to the product cards, confirming their safety. Additionally, we have conducted such integration with the registers of agencies from Kyrgyzstan and Belarus. Moreover, integration with the Roszdravnadzor (Federal Service for Surveillance in Healthcare) register of medical devices was recently launched on the platform. Registration certificates for such goods are also reflected in the product description, and over 60,000 product cards have already been verified through the register," said Tatyana Kim.

As part of the National Economy Days at the National Centre RUSSIA, the largest digital platforms — RWB (Wildberries & Russ), Ozon, and Avito — signed a Memorandum on Fair Practices for Digital Platforms at the National Centre RUSSIA on 11 November. The list of voluntary commitments is designed to strengthen trust between the state, business, and users, and to lay the foundation for the sustainable development of Russia's platform economy in the long term. According to Tatyana Kim, much remains to be done before the law comes into force, but this time will be beneficial. Thanks to this, the company will be able to work out each process thoroughly. The Memorandum, in the opinion of the Wildberries founder, will help accelerate processes both from the side of the platforms and from the side of state bodies.

Representatives from Ozon emphasise: the platformisation of trade has ensured product equality between villages and large cities in Russia. Already, more than 130 million residents of the country can get all the necessary goods within walking distance from home, thanks to the development of pickup points. The company focuses on its development in regions and small towns, where people really need a wide range of goods. Today, in settlements with a population of up to 10,000 people, about 35,000 pickup points are operating, and their residents make 40% of all orders on the marketplace.

Platform Economy Day at the National Centre RUSSIA was held on 11 November. The key topic of expert discussion was the rapidly growing potential of digital platforms in the global economy.

The discussions involved representatives of the Presidential Executive Office of the Russian Federation, the Government of the Russian Federation, the Federation Council and the State Duma, heads and representatives of ministries, departments and development institutions, heads and representatives of constituent entities of the Russian Federation, specialists from the business sphere and leading business associations, as well as international experts.