Economics of Free Mobile Applications: Personal Data and Third Parties

42 Pages Posted: 10 Mar 2018 Last revised: 15 Mar 2020

See all articles by Grazia Cecere

Grazia Cecere

Institut Mines Telecom, Business School, LITEM

Fabrice Le Guel

Université Paris-Sud

Vincent Lefrere

Institut Mines-Télécom Business School

Date Written: March 13, 2020

Abstract

Personal data are essential to Internet companies, but their involvement in the smart-phone apps market remains relatively unexplored. We provide empirical evidence on the strategies of free apps by studying whether the collection of personal data and use ofthird parties are combined with more traditional revenue sources such as advertising and freemium. We combine data collected via Google Play Store with data on privacy-related behaviors provided by Privacy Grade to create a unique dataset we use to measure app monetization. One important aspect that we study is the business-to-business third party market. We investigate whether personal data are more likely to be collected by apps that use third parties such as companies offering social network services or access to advanced services. We use an instrumental variable approach to address potential endogeneity of data collection. Our results show that data collection is negatively associated with freemium or advertising business models.

Keywords: Economics of Mobile Applications, Economics of Privacy

JEL Classification: D82, D83, M31, M37

Suggested Citation

Cecere, Grazia and Le Guel, Fabrice and Lefrere, Vincent, Economics of Free Mobile Applications: Personal Data and Third Parties (March 13, 2020). Available at SSRN: https://ssrn.com/abstract=3136661 or http://dx.doi.org/10.2139/ssrn.3136661

Grazia Cecere (Contact Author)

Institut Mines Telecom, Business School, LITEM ( email )

9, rue Charles Fourier
Évry, Ile de France 91011
France

Fabrice Le Guel

Université Paris-Sud ( email )

Faculté Jean-Monnet, 54, bd Desgranges
Sceaux, 92331
France

Vincent Lefrere

Institut Mines-Télécom Business School ( email )

9 rue Charles Fourier
Evry, 91011
France

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