Abstract

Providers of leading digital services follow a data-centric business model that enables them to provide their users with highly beneficial, personalized services but also threatens the users’ privacy. These threats need to be addressed, not only to protect the users’ privacy, but also to establish stable and sustainable markets for digital services. Hence, approaches towards privacy protection have to cater not only to users’ need for control but also to businesses’ desire for data collection and usage. This paper takes an economic perspective on the privacy threats in digital services and presents a framework for reconciling digital services and privacy. In particular, this paper conceptualizes the privacy threats in digital services as agency problems and discusses the feasibility of transferring classic approaches for addressing agency problems to the domain of privacy in digital services. The paper analyzes in detail the transferability of the concept accountability to the examined domain and presents an accountability-centric framework for reconciliation along with a requirements analysis for technological implementation of the framework.

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