Start Date
10-12-2017 12:00 AM
Description
Data portability allows users to transfer data between competing online services. As data gets increasingly valuable for online services and users alike, the enforcement of data portability within the European Union by the General Data Protection Regulation will have important ramifications for the competition in online markets. Thus, we develop a game-theoretic model to examine firms’ strategic reaction to data portability and to identify ensuing market outcomes. We show, among others, that although data portability is designed to protect users, they may be hurt because market entrants have an incentive to increase the amount of collected data compared to a scenario without data portability. However, profits for new services and total surplus increases if the costs for implementation are not too large. This likely improves innovation and service variety. Consequently, our results provide important insights and case-specific recommendations for managers and policy makers in data-driven online markets.
Recommended Citation
Wohlfarth, Michael, "Data Portability on the Internet: An Economic Analysis" (2017). ICIS 2017 Proceedings. 5.
https://aisel.aisnet.org/icis2017/Economics/Presentations/5
Data Portability on the Internet: An Economic Analysis
Data portability allows users to transfer data between competing online services. As data gets increasingly valuable for online services and users alike, the enforcement of data portability within the European Union by the General Data Protection Regulation will have important ramifications for the competition in online markets. Thus, we develop a game-theoretic model to examine firms’ strategic reaction to data portability and to identify ensuing market outcomes. We show, among others, that although data portability is designed to protect users, they may be hurt because market entrants have an incentive to increase the amount of collected data compared to a scenario without data portability. However, profits for new services and total surplus increases if the costs for implementation are not too large. This likely improves innovation and service variety. Consequently, our results provide important insights and case-specific recommendations for managers and policy makers in data-driven online markets.