Unpacking Privacy's Price

44 Pages Posted: 14 May 2012 Last revised: 17 Mar 2023

See all articles by Jan Whittington

Jan Whittington

University of Washington

Chris Jay Hoofnagle

University of California, Berkeley - School of Law; University of California, Berkeley - School of Information

Date Written: June 14, 2012


This is the first in a two-part series of articles exploring consumer-oriented internet services through the lens of transaction cost economics. This work shows how personal information transactions—“free” exchanges—can be uneconomical: consumers cannot exit these arrangements; they create lock-in; and ultimately this is a deep moat against competition. Free transactions enable companies to bait consumers with what appears to be a good deal, but then substitute a switch—degrading privacy quality. This work has important antitrust law implications: the scaling and lock-in made possible by zero price inducements makes it next to impossible for competitors to swoop in with better products.

Under current structures of governance, there is no exit for consumers who wish to leave an SNS. In other contexts, similar transactions are bounded by tailored consumer protections. This article explains the need for tailored consumer protection in the SNS context to promote fair competition. Specifically, we argue that a consumer right to rescind enrollment in an SNS, triggering a deletion of and ability to export information shared with the service, is appropriate given the skewed aspects of personal information transactions.

Keywords: antitrust, transaction cost economics, TCE, free, competition law, privacy, Facebook, social network services, right to delete, portability, right to be forgotten, Williamson, New Institutional Economics, Federal Trade Commission, FTC free guide, platform economics, zero price antitrust

JEL Classification: A13, B25, D18, D23, D82, D18, K20

Suggested Citation

Whittington, Jan and Hoofnagle, Chris Jay, Unpacking Privacy's Price (June 14, 2012). Jan Whittington & Chris Jay Hoofnagle, Unpacking Privacy's Price, 90 North Carolina Law Review 1327 (2012), Available at SSRN: https://ssrn.com/abstract=2059154

Jan Whittington

University of Washington ( email )

224 Gould Hall
Box 355726
Seattle, WA 98195
United States
206-221-6298 (Phone)

HOME PAGE: http://urbdp.be.washington.edu/people/jan-whittington/

Chris Jay Hoofnagle (Contact Author)

University of California, Berkeley - School of Law ( email )

341 Berkeley Law Building
Berkeley, CA 94720-7200
United States
‭(510) 666-3783‬ (Phone)

HOME PAGE: http://hoofnagle.berkeley.edu

University of California, Berkeley - School of Information ( email )

212 South Hall
Berkeley, CA 94720-4600
United States
510-643-0213 (Phone)

HOME PAGE: http://hoofnagle.berkeley.edu

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