Unpacking Privacy's Price

Abstract

This article introduces a transaction cost economic framework for interpreting the roles consumers play in social networking services (“SNSs”). It explains why the exchange between consumers and SNSs is not simple and discrete, but rather a continuous transaction with atypical attributes. These exchanges are difficult for consumers to understand and come with costs that are significant and unanticipated. 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. 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: transaction cost economics, TCE, free, free offers, 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, competition

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