The Value of Personal Data in Internet Commerce: A High-Stake Field Experiment on Data Regulation Policy

Posted: 3 Jun 2020

See all articles by Tianshu Sun

Tianshu Sun

Cheung Kong Graduate School of Business; University of Southern California - Marshall School of Business

Zhe Yuan

Alibaba Group

Chunxiao Li

Alibaba Group

Kaifu Zhang

Alibaba Group

Jun Xu

Alibaba Group

Date Written: January 10, 2020

Abstract

Personal data has become a key input in Internet Commerce, facilitating the matching between millions of customers and merchants. Recent data regulations in China, Europe and US restricts Internet platforms' ability to collect and use personal data for personalized recommendation and may fundamentally impact Internet Commerce. In collaboration with the world's largest E-commerce platform, we conduct a large-scale field experiment to measure the potential impact of data regulation policy, and to understand the value of personal data in Internet Commerce. For a random subset of 555,800 customers on Alibaba platform, we simulate the regulation by banning the use of personal data in the homepage recommendation algorithm and record the matching process and outcomes between these customers and merchants. Compared to the control group with personal data, we observe a significant higher concentration in the algorithmic recommendation of products in the treatment group and a very sharp decrease in the matching outcomes as measured by both customer engagement (clickthrough rate and product browsing) and market transaction (GMV). The negative effect is disproportionate and more pronounced for niche merchants and customers who would benefit most from E-commerce. We discuss the economic impact of data regulation on Internet Commerce, as well as the role of personal data in generating value and fostering innovations.

Keywords: Personal Data, Privacy Regulation, E-commerce, Field experiments, Personalization, Market Structure

Suggested Citation

Sun, Tianshu and Yuan, Zhe and Li, Chunxiao and Zhang, Kaifu and Xu, Jun, The Value of Personal Data in Internet Commerce: A High-Stake Field Experiment on Data Regulation Policy (January 10, 2020). Available at SSRN: https://ssrn.com/abstract=3566758

Tianshu Sun (Contact Author)

Cheung Kong Graduate School of Business ( email )

1017, Oriental Plaza 1
No.1 Dong Chang'an Street
Beijing
China

University of Southern California - Marshall School of Business ( email )

3670 Trousdale Parkway
Bridge Hall 310B
Los Angeles, CA 90089
United States

Zhe Yuan

Alibaba Group

Chunxiao Li

Alibaba Group

Kaifu Zhang

Alibaba Group

Jun Xu

Alibaba Group

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