Competing with Privacy

We analyze the implications of consumer privacy for competition in the marketplace. Firms compete for consumer information and derive revenues both from consumer purchases as well as from disclosing consumer information in a secondary market. Consumers choose which firm to patronize and how much personal information to provide it with. We show that firms maximize profits by focusing on a single revenue source and competing at the extensive rather than the intensive margin, outperforming competitors by attracting a larger customer base. We also show that competition drives the provision of services with a low level of consumer information disclosure (high level of privacy), but higher competition intensity in the marketplace need not improve privacy when consumers exhibit low willingness to pay. Our findings are relevant to the business models of Internet firms and contribute to inform the regulatory debate on consumer privacy

STRATEGIC DATA PRIVACY POSITIONS: AN EXPLORATORY ANALYSIS OF FORBES GLOBAL 2000 COMPANIES

Data privacy has become a strategic issue. Companies increasingly rely on personal data to advance their business models. However, in doing so they must address ever-growing customer concerns, thus necessitating that they go beyond merely complying with regulations. Strategic privacy principles that reflect strategic privacy choices are the fundamental pillars for companies’ privacy strategies. Our data set covers strategic privacy principles from 171 Forbes Global 2000 companies that communicate them externally. Our preliminary results show that these companies take six different positions on data privacy. The positions are those of trust builders, data shepherds, data professionals, data caretakers, privacy minimalists and data justifiers. Executives can leverage our insights to actively influence the positioning of their company by defining or adapting its strategic privacy principles. Moreover, our clustering results provide a basis for further analysis of strategic privacy positions, the results of which may have implications for companies’ financial performance

A survey experiment on information, inattention and online privacy

Personal data lie at the forefront of different business models and constitute the main source of revenue of several online companies. In many cases, consumers may have incomplete information or may be inattentive about the digital transactions of their data. This paper investigates whether highlighting positive or negative aspects of online privacy policies, thereby mitigating the informational problem, can affect consumers’ privacy actions and attitudes. Results of an online survey experiment indicate that participants adopt a more conservative stance on disclosing sensitive and identifiable information, even when positive attitudes of companies towards their privacy are made salient, compared to when privacy is not mentioned. On the other hand, they do not change their attitudes and social actions towards privacy. These findings suggest that privacy behavior is not necessarily sensitive to exposure to objective threats or benefits of disclosing personal information. Rather, people are inattentive and their dormant privacy concerns may manifest only when consumers are asked to think about privacy.publishersversionpublishe

The ownership of data

We study the effects of property rights over the use of data on market outcomes. To do so, we consider a model in which a monopolistic firm offers a service to a set of heterogeneous users. The use of the service generates valuable data, but data extraction entails a privacy cost for users. A trade-off emerges between under-processing and over-monetization of data. We show that both the firm and users prefer the users (the firm) to own the rights for low (high) values of data. We further discuss the robustness of our results when allowing more possible contracts for the data owner and show that the main trade-off is robust to these extensions

The Role of Privacy Protection in Business Models for Sustainability: A Conceptual Integration from an Ecosystem Perspective

Purpose: The principal purpose of this article is to address a critical issue emerging in the realm of interorganizational dependencies heavily impacted by digitalization, namely developing business models that would protect privacy in a sustainable way. On the one hand, companies have been jointly proposing, creating, delivering, and capturing value through an excessive, unethical exploitation of personal data and information. On the other, restricting and controlling flows of data and information hampers the processes that lead to social well-being. This article reflects on this paradox by building on the theories of business models for sustainability and contextual integrity, while offering a holistic conceptual narrative guiding the sustainable transition towards digital equity and inclusivity. Design/methodology/approach: This conceptual article can be classified as a theory synthesis paper with the ambition to achieve an outcome that enhances knowledge on concepts and a phenomenon by a conceptual integration across two different, previously unconnected literature streams and theories. Findings: This article suggests that businesses which play any role in transmission of data and information cannot be sustainable without protecting privacy as a social value. Furthermore, it argues that privacy cannot be protected without addressing the appropriateness of both flow and use of data and information with respect to all involved stakeholders. Ultimately, via linking two distinct yet interrelated and rigorously developed research streams, a heuristic framework for privacy and sustainability in business models is proposed as a system of key considerations for managers to apply in assessing and planning a business practice, so it protects privacy in a sustainable way. Originality/value: The key theoretical contribution of this article can be considered twofold. Firstly, it unfolds the relevance of privacy protection for the stream of business model research directed toward sustainable development in a way that is theoretically rigorous, complementary with the stakeholder theory, and reflecting the changing interorganizational dependencies affected by digitalization. Secondly, it contributes to the contemporary debate on privacy as a social value through identifying theoretically thorough avenue for adapting the theory of contextual integrity to a social domain where value proposition, creation, delivery, and capture with and for stakeholders involves transmission of data and information

The ownership of data

We study the effects of property rights over the use of data on market outcomes. To do so, we consider a model in which a monopolistic firm offers a service to a set of heterogeneous users. The use of the service generates valuable data, but data extraction entails a privacy cost for users. A trade-off emerges between under-processing and over-monetization of data. We show that both the firm and users prefer the users (the firm) to own the rights for low (high) values of data. We further discuss the robustness of our results when allowing more possible contracts for the data owner and show that the main trade-off is robust to these extensions

Mobile applications and access to private data : the supply side of the Android ecosystem

We analyze the data collection strategies of 65,000 developers in the market for mobile applications and track 300,000 applications over four years. Many apps belong to developers with multiple apps. This fact generates variation in the privacy behaviors of the same developer for our analysis. We uncover three stylized facts: First, developers “learn” to use increasingly intrusive data strategies as they become more experienced. Second, intrusive data collection is most likely in apps that target the 13+, and 16+ age category, which raises concerns for the protection of young app consumers. Third, even within developers, critical and atypical permissions predict problematic usage of private user data most successfully. Our findings inform both regulators and scientists who wish to model supply in the market for mobile apps

Privacy and Platform Competition

We analyze platform competition where user data is collected to improve adtargeting. Considering that users incur privacy costs, we show that the equilibrium level of data provision is distorted and can be inefficiently high or low: if overall competition is weak or if targeting benefits are low, too much private data is collected, and vice-versa. Further, we find that softer competition on either market side leads to more data collection, which implies substitutability between competition policy measures on both market sides. Moreover, if platforms engage in two-sided pricing, data provision is efficient

“Now that you mention it”: a survey experiment on information, salience and online privacy

Personal data lie at the forefront of different business models and constitute the main source of revenue of several online companies. In many cases, consumers have incomplete information about the digital transactions of their data. This paper investigates whether highlighting positive or negative aspects of online privacy, thereby mitigating the informational problem, can affect consumers’ privacy actions and attitudes. Results of two online survey experiments indicate that participants adopt a more conservative stance on disclosing identifiable information, such as name and email, even when they are informed about positive attitudes of companies towards their privacy. On the other hand, they do not change their attitudes and social actions towards privacy. These findings suggest that privacy concerns are dormant and may manifest when consumers are asked to think about privacy; and that privacy behavior is not necessarily sensitive to exposure to objective threats or benefits of disclosing personal information