In the summer of 2020, the competition between the largest Russian digital ecosystems intensified. The two leaders - Sberbank and Yandex - split the assets of the two joint venture projects - Yandex.Money and Yandex.Market. Another joint venture - of Mail.ru Group and Sberbank - received additional funding. Yandex reorganized two of its applications in the field of transport: the service for taxi drivers was turned into a universal platform for self-employed  persons Yandex.Pro, and Yandex.Taxi became the super-app Yandex Go.

The "divorce" with Yandex was very quick: only one month passed from the announcement of the decision till the closure of the deal, although during the announcement it was planned to do it within three months. CEO of Sberbank German Gref explained it by the strong competition between the ecosystems of two companies. Throughout the year, from the moment when the first rumors about the tensions with its former partner emerged, Sberbank has strengthened relations with Mail.ru Group: it acquired 36% in the part-owner of the IT holding, created a joint venture with this company in the O2O field, and jointly invested in other projects. A few days after the division of the joint venture with Yandex, it was announced that Sberbank had increased its stake in Rambler Group to 55%. Later it turned out that the IT company was also preparing to break up and had already registered nearly two dozen trademarks for its own financial and insurance products.

For the Russian market a business ecosystem is a relatively new phenomenon. At the same time, there is no generally accepted methodology for external assessment of companies for their ecosystems. It is possible to analyze the number of projects, the amount of revenue, or predict the socio-economic effects that arise from the impact of each ecosystem and its joint assets.

This review includes three ecosystems of the companies, which were mentioned in the news in the context about ecosystems - Sberbank, Yandex and Mail.ru Group. These companies may have similar goals at first glance, but their  strategies and in financial performance are different. (the data for 2019 is available in RBC 500 ranking)

ICT.Moscow analyzed news items from November 2019 to August 2020, compiled lists of services of the three companies and tried to identify the main vectors and current specifics of these ecosystems development, the frequency of mentioning the joint ventures and the assets splits, and also assess how the economic crisis of 2020 stifled the growth of tech giants.

Sberbank

Sberbank is one of the most actively developing ecosystems in the Russian market. At the beginning of 2019 (two years after this business approach was announced) its ecosystem consisted of 20 companies, and in the news reports at the end of 2019 - the beginning of 2020 already 48 projects were mentioned. Over the period of two years, the tech giant has invested 125 billion rubles in building its ecosystem and received its first profit of approximately $1 billion.

Source: Sberbank

In August 2020 ICT.Moscow found over 75 Sberbank-related projects, and over the past six months we found almost 15 projects in which the share of ownership has been increased or investments have been made: 

• JV created: Soyuzmultfilm, “O2O Holding” (jointly with Mail.ru Group)

• Share increased: Yandex.Money, Rambler Group 

• Acquired: Samokat (via JV with Mail.ru Group), URent (via JV with Mail.ru Group), 2GIS (Sberbank acquired 72%, another 3% — JV with Mail.ru Group)

• Investments made: Malivar, Legium.io 

• Launched: Sber Business Bot, SberHealth, SberAdvisor, mobile application Take&Go, SberAuto marketplace

The bank plans plans to complete the creation of the ecosystem by 2024, so the transformation should take place within 6 years. The completion date so far coincides with the period for which German Gref was re-elected as head of Sberbank in May 2019.

During the period under review Sberbank put at least two projects into commercial operation in the areas new to the company - the Christophari supercomputer and autonomous agricultural machinery. In the niches where the bank is already present, steps that indicate ambitious development plans were taken: for example, Sberbank-Telecom (MVNO-operator under the Sbermobile brand) became interested in frequencies for 5G and the prospects for independent network building. By doing so the company actually repeats the actions of the Chinese tech giant Alibaba, which launched its own 5G laboratory. Another similarity between the two companies is the development of the cloud direction and providing their computing power to the business.

The ecosystem of Sberbank was replenished with its first own gadget - a TV set-top box (developed by the SberDevices which was created last autumn) at the beginning of the year. Initially, the device was intended for watching the content of Okko online cinema, which is also part of the company’s ecosystem. But later it was proposed to use the device for distance education, when this area became especially relevant due to the pandemic.

Sberbank joined the fight against COVID-19 as a technology company: it developed a disinfection robot, made its artificial intelligence model available to the regions for diagnosing coronavirus based on CT, learned to recognize schoolchildren without masks in video. In total, the company presented about 10 solutions and initiatives. In the summer, the bank launched SberHealth based on DocDoc medical service.

Sberbank resorts to the help of partners. For example, the bank is developing unmanned agricultural machinery as part of a joint venture with Cognitive Technologies. It also opened the first smart store without sellers and cash register together with “Azbuka Vkusa” and Visa. The question remains, how user data is separated and exchanged among partners.

During the period under review, only one project related to Sberbank was closed. It was Bringly marketplace from a joint venture with Yandex. The activity of “Digital Platform Solutions”, a joint venture with the Government of Moscow, was also frozen (according to TAdviser). In general, the bank’s strategy is being implemented without visible failures. The only exception is the rebranding and a new single design for all services, which were expected in June and which were never officially presented separately. 

According to the bank’s latest quarterly report, net profit amounts to 166.7 billion rubles, showing a 33.4% decrease compared to same period of last year. At the end of the second quarter of 2020, more than 11 million customers used a single login (Sber ID) to access the services of 45 ecosystem partners.

The ecosystem of Sberbank clearly demonstrates investor tactics - the company is actively investing in new areas and gets rid of illiquid assets, striving to control the processes in joint projects. In particular, the identical amounts of investments and the shares received in deals with startups (10 million rubles each for 8.06% in Malivar and Legium.io) show the consistency of the company’s approach.

After Sberbank exited Yandex.Market project, its ecosystem no longer has a universal marketplace (although there is a delivery service for groceries and household goods, including express delivery in Moscow and car sales). In early summer the media reported on the plans of the company to buy 30% of the online retailer Ozon, but this information was not officially confirmed. There are also plans to open a marketplace based on the 2GIS cartographic service, in which the bank acquired a controlling stake.

 Yandex

Yandex is one of the pioneers in creating online solutions for various life tasks. In 2010 the company’s portfolio included about 50 specialized services. Today there are over 120 services, but not all of them can be classified as ecosystem services, there are also experimental ones. At the same time, building an ecosystem did not appear in official documents separately as a goal or business strategy of the company. The launch of large projects in Yandex was explained as developing new directions and areas. The term “ecosystems” was found in press releases and statements by the company’s top management, but it did not denote a business model or development strategy and was used to describe the technological environment in which new developments and solutions appear.

The current visualization of the landscape of projects in alphabetical order is presented in a special section on the Yandex website, but not all assets are included there (the principle for selection is not given), the alphabetical list includes both large projects and relatively small services (for example, Yandex.Teleprogram). The section does not mention Yandex.Self-driving cars and Rover and School of Data Analysis. 36 products for business are presented in a separate showcase.

Source: Yandex

Over the past six months Yandex has launched five ecosystem projects. In August, the company presented two updated apps that combine the functionality of existing services and were aimed at attracting more users to the ecosystem. The first of these was Yandex.Pro, a unified platform for the self-employed persons, created on the basis of Yandex.Taxometer. The second is Yandex Go super-app, which includes the functionality of taxi, car sharing, food delivery, courier delivery and ground transport timetables.    

Previously the company presented Yandex.Telemost video call service, the online service for teaching elementary school students Yandex.School and the Q&A service “Q”. The latter is an example of buying a ready-made solution and integrating it with the existing elements of the ecosystem: in March 2019, Yandex acquired Q&A service TheQuestion to combine it with its own project Yandex.Experts and increase the number of quick answers in search results and integrate them into the dialogues of Alice. Another example of integration, but of a service created within the company, not of a third-party service, is transferring the functionality of Transport application, which is no longer available, to the Maps application. Similarly, Yandex.People service was no longer available as a separate product and was integrated into the general search service. In April, the direction of car sharing, and then in March and the social network “Aura” were reorganized into separate businesses (later it was announced that “Aura” had been closed).

Major events in the period under review:

• JV created: none 

• ·Shares increased: Yandex.Market

•  Acquired: none

• Investments made: production of series for KinoPoisk HD, Foodcast.ai (via Yandex.Chef) 

• Launched: Yandex.Telemost, Yandex.School, Yandex.Rover, Q, Yandex Pro, Yandex Go

Arkady Volozh called driverless vehicles “the most promising area”. This area stepped forward when the fourth generation of self-driving cars was introduced in June, and in July Yandex’s self-driving cars entered the world’s top 3 in terms of the number of miles driven by autonomous vehicles. Yandex also continued to develop its self-driving courier - it was tested by Beru marketplace for the delivery of small goods. The first commercial project has already been carried out - the delivery of small documents and parcels at Skolkovo. By November (one year since the launch of the project), Rovers may begin to be involved in FoodTech projects (Yandex.Lavka and Food). It should be noted that the company was engaged in developing a roadmap for the phased implementation of unmanned vehicles in Russia and an action plan (the draft document was supported by the Ministry of Economic Development).

In terms of FoodTech, in the first half of 2020, there were reports about the frequent expansions of Yandex.Store delivery zones and the expansion of the service’s presence - Nizhny Novgorod has become the third city after Moscow and Saint Petersburg where it is available. The expansion is likely to be continued in the same way as it happened with Yandex.Taxi.

But Yandex.Taxi did not purchase the assets of  “Vezet” - FAS did not approve the deal. This can be seen as a likely future obstacle to the development of ecosystems: foreign tech giants using this model faced serious claims from the antimonopoly authorities. In Russia businesses regularly complain about Yandex’s abuse of its dominant position and the prioritization of its own services in search results.

After Sberbank acquired controlling interest in Yandex.Money, the IT company has a gap in FinTech. Yandex is likely to develop this area independently: in every press release on the assets split, it was noted that the company would be able to develop its own financial services. In early July, a financial management platform integrated into Yandex.Plus was launched together with VTB. And in the middle of the month, the journalists found out that Yandex had submitted applications to Rospatent to register the trademarks for a number of financial services, including “Yabank” and “Yacredit”. Moreover, Yandex has recently become a member of the Fintech association. The service for self-employed persons Yandex.Pro launched on the basis of Yandex.Taxometer also allows customers to manage finances, for example, keep track of income and pay taxes.

In the field of artificial intelligence, a cloud environment for the development of machine learning (ML) models was launched, and the company also announced its intention to invest $40 million in a cloud platform for working with AI (joint project with Nvidia). Together with HSE, Yandex launched a data science research laboratory, and with ITMO University - a joint master’s program in data analysis.

Most service updates were carried out in advertising and information services and search systems. During COVID-19 pandemic, Yandex launched several notable projects at once - the company created a map showing how coronavirus spreads, launched home testing, and added index showing the level crowdedness in stores in Yandex.Maps. Some of these services were also made available to the regions.

Yandex actively cooperates with the administrations of different cities and regions to find ways to distribute the elements of its ecosystem. For example, the company has entered into cooperation agreements with the Belgorod, Voronezh, Irkutsk, Ryazan, Samara and Chelyabinsk regions.

Yandex still does not plan to engage in telecommunications: at the beginning of the year, it denied media reports about the plans to launch its own virtual operator. In November 2019, sales of the company’s first smartphone, Yandex.Phone, were also completed. In Yandex considers the experiment a successful demonstration of the capabilities of its voice assistant and other services, but there was no more information about the development of this area.

According to the quarterly report, neither economic crisis nor the assets split affected the indicators. The consolidated revenue of the company remained at the same level as in the second quarter of 2019 - 41.4 billion rubles. The share of Yandex’s non-advertising revenue was 40%, while in the second quarter of 2019 it was 30%.

The actions of Yandex demonstrate technological orientation of the ecosystem and the prioritization of the independent development of new services within the company. Yandex does not strive to create joint ventures and does not buy many third-party projects. The company prefers to develop independently, which may limit growth areas.

Mail.ru Group

The Mail.ru Group report named 2019 as a turning point in the transition to the ecosystem and outlined the company’s strategic goal - to become Russia’s largest ecosystem. In August 2020, the company appointed vice president for ecosystem products, Anna Artamonova.

Previously, the holding developed several autonomous ecosystems within separate departments - in social networks VKontakte and Odnoklassniki, in the gaming platform MY.GAMES, as part of the mailing service, etc., and also bought other companies (for example, Delivery Club in 2016). The launch of a common ID for all the services in November 2019 was an important step for unifying its services.

Source: Mail.ru Group

As of August 2020, the Mail.ru Group’s ecosystem includes 30 services and products (including those related to a joint venture with Sberbank). 

Events in the period under review:

• JV created: “O2O Holding” (with Sberbank) 

• Shares increased: Citymobil

• Acquired: Samokat (via JV with Sberbank), URent (via JV with Sberbank), 2GIS (3% via JV with Sberbank) 

• Investments made: “Local kitchen”

• Launched: “Look Mail.ru”, smart speaker “Capsule”, ICQ New messenger, platform “#betterathome”, media project “Home Mail.ru”, mobile browser Atom, etc.

The IT-holding repeats many action of Yandex and develops the fields in which this IT company operates. It’s not just adding food delivery, carsharing and taxi services to online products: following Yandex.Station with “Alice”, at the end of 2019 Mail.ru Group presented its own smart speaker Capsule with voice assistant Marusya. Sales of the gadget began in April.

During the period under review, Mail.ru Group launched 6 video-related projects. They are a beta version of the online video service of recommendations Look Mail.ru (similar to Yandex.Ether) and video communication services and functions implemented in other products of the ecosystem. The company also presented 5 products and services related to advertising, both online and offline. Online advertising remains the largest source of revenue for Mail.ru Group (as well as for Yandex).

During COVID-19 pandemic, Mail.ru Group launched an open platform #betterathome to support citizens and businesses, and also helped Botkin.AI to scale up AI technologies to combat coronavirus in the country. And in July Delivery Club launched the delivery of non-pharmaceutical goods from pharmacies in Moscow.

Like the other two Russian digital ecosystems under review, Mail.ru Group is actively engaged in education projects. In the spring, the IT holding, together with National University of Science and Technology (MISIS) and SkillFactory, launched a Russian-language online master’s program in Data Science, and together with GeekBrains and VKontakte launched a course on anti-crisis program to support entrepreneurs. Mail.ru Group also received a 40.4% pledge in SkillFactory (specializes in IT training).

In December, Mail.ru Group and Sberbank announced the completion of a joint platform in the field of FoodTech and transport, which included Citymobil, YouDrive, Delivery Club, SberFood, SberMarket and other holdings. The parties received equal shares in the joint venture and did not eliminate a possibility of attracting new partners in the future. The parties also agreed not to develop the corresponding services outside the JV. It can be called the most significant event from November 2019 to August 2020 in terms of building an ecosystem.

In November, Mail.Ru Group increased its share in Citymobil by 6.9% to 29.7%. At the beginning of the year, the share of Sberbank and Mail.ru Group in the taxi service exceeded 95% after financial investors sold their shares. The JV invested in the FoodTech service “Local kitchen” and acquired a controlling stake in the “Samokat” service and invested in the URent electric scooter rental service. In addition, the joint venture received 3% of 2GIS as a result of the purchase of a mapping service by Sberbank.

The second key joint venture (valued at $2 billion) of Mail.ru Group is AliExpress Russia. The IT company has handed its Pandao e-commerce business over to the joint venture founded in October last year and helps with distribution through integration with its other products. In January, it was announced that a payment system for AliExpress Russia would be launched under this partnership within a year.

According to the Mail.ru Group report, in the second quarter of 2020, the total segment revenue grew by 25.5% compared to the same period last year and amounted to 25.3 billion rubles. Advertising revenue decreased by 5.2% to 7.9 billion rubles.

Having defined the ecosystem as its business model, the IT holding uses all methods to build and expand it, including following the steps of competitors. The company uses its own development resources for digital applications (online services, games, voice assistant, etc.). For products related to offline (for example, in transport, FoodTech, e-commerce), Mail.ru Group actively and willingly enters into partnerships with other players. It is confirmed by the representatives of the company:

The head of the IT holding, Boris Dobrodeev, also drew parallels with the Chinese WeChat and pointed out that Mail.ru Group is the only Russian company with such strong communication resources.

* * *

During the period under review there was an insignificant increase in ecosystem projects, more often functional updates of existing projects and services were noted. Among the three ecosystems, Yandex has the highest number of projects, while Sberbank, as expected, is in first place in terms of revenue.

These steps clearly illustrate the fundamental differences in the company’s approach to building ecosystems. The Yandex ecosystem is formed from the inside, in a “natural” way, as a result of using a common technological base and experimentation, when successful cases are integrated into existing services. However, the ecosystem approach is not formally recorded as a strategic goal of the company, for which it is essential to develop independently.

The goal other two companies under review is building an ecosystem, and actively interacting with other players - through investments, acquisitions or creation of joint ventures.

Sberbank, having more resources, is more active, and is developing new areas, for example, unmanned agricultural machinery. Mail.ru is ready to act as a partner, offering its own services for inclusion in larger ecosystems. If the main advantage of the bank is its financial capacity for investment, then for the IT company its main advantage is assessment of the development of social networks and messengers, around which it builds its ecosystem through the creation of a super-app (Yandex had several independent attempts to enter this segment, but none of them was successful).

Yandex can only hope for its own assessment and examination. This approach is yielding results - for example, the development of unmanned vehicles started in 2017. However, simultaneous development in many directions may be impossible without new partners, and here companies will probably have to make some compromises. On the other hand, attracting $800 million by placing newly issued Class A shares will give the company additional opportunities to develop its ecosystem.

Geopolitical factors may also affect the development of Russian ecosystems. First and foremost, during foreign markets development. Over the past month, United States authorities have demonstrated the willingness to tightly regulate the activities of IT giants, both American companies and companies that are non-residents of the United States. The US President actually issued an ultimatum to the Chinese service TikTok, and any successful foreign IT project may face similar measures. Nevertheless, hours of interrogation by the US Congress of the leaders of Facebook, Amazon, Apple and Aplhabet (Google) showed that even American digital ecosystems cannot concentrate too much power and user data in their hands.

What do other companies think of the Russian ecosystem market?

The companies which were discussed above were selected as the most frequently mentioned in the context of ecosystems. However, they are not the only ones who adhere to this business model in Russia. For example, in a joint study by Spektr and Aventica for 2019, Sberbank, Yandex, Mail.ru Group, Tinkoff and MTS were analyzed, and VTB and Rostelecom were also mentioned. It should be noted that, for example, Tinkoff was the first companies in the Russian market to release a super-app that combined the functionality of several services.

ICT.Moscow asked the representatives of Tinkoff and MTS what are the peculiarities of the Russian ecosystem market and how they view competition in this area.

Original (in Russian)