Competition and Privacy in Online Markets: Evidence from the Mobile App Industry

51 Pages Posted: 24 Feb 2020

See all articles by Reinhold Kesler

Reinhold Kesler

University of Zurich

Michael Kummer

ZEW – Leibniz Centre for European Economic Research

Patrick Schulte

Deutsche Bundesbank

Date Written: 2019

Abstract

Policy makers are increasingly concerned about the combination of market power and massive data collection in digital markets. This concern is fueled by the theoretical prediction that more market power causes firms to collect ever more data from their users. We investigate the relationship between market power and data collection empirically. We analyze data about more than 1.5 million mobile applications in several thousand submarkets of Google’s Play Store. We observe these data for over two years and combine information on an app’s data collection with information about its competitive environment. Our analysis highlights a robust positive relationship between market power and data collection. We find that more data are being collected in concentrated markets, and apps with higher market shares collect more data. This pattern robustly emerges across a series of cross-sectional and panel regressions as well as a series of specifications that exploit exogenous variation.

Keywords: Competition, Market Power, Privacy, User Data, Apps

JEL Classification: L17, D4, D85, D29

Suggested Citation

Kesler, Reinhold and Kummer, Michael and Schulte, Patrick, Competition and Privacy in Online Markets: Evidence from the Mobile App Industry (2019). ZEW - Centre for European Economic Research Discussion Paper, Available at SSRN: https://ssrn.com/abstract=3542203 or http://dx.doi.org/10.2139/ssrn.3542203

Reinhold Kesler (Contact Author)

University of Zurich ( email )

Rämistrasse 71
Zürich, CH-8006
Switzerland

Michael Kummer

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Patrick Schulte

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

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