The Economics of the German Investigation of Facebook’s Data Collection

44 Pages Posted: 2 Jun 2020

See all articles by Oliver Budzinski

Oliver Budzinski

Ilmenau University of Technology

Marina Grusevaja

RheinMain University of Applied Science

Victoriia Noskova

Ilmenau University of Technology

Date Written: April 4, 2020

Abstract

The importance of digital platforms and related data-driven business models is ever in-creasing and poses challenges for the workability of competition in the respective markets (tendencies towards dominant platforms, paying-with-data instead of traditional money, privacy concerns, etc.). Due to such challenges, investigations of such markets are of high interest. One of recent cases is the investigation of Facebook’s data collection practices by German competition authorities. Our paper, in contrast to the wide stream of legal stud-ies on this case, aims to analyze whether Facebook’s practices regarding data collection could constitute an abuse of market power from an economic perspective, more specifi-cally against the background of modern data economics. In doing so we summarize the state of the advanced theories, including influences from behavioral economics, address-ing such markets, and discuss four potential theories of harm.

Keywords: data economics, big data, economics of privacy, competition, Facebook case, paying-with-data, abuse of dominance, market power, digital economy

JEL Classification: K21, L41, L86, L12, M21, L14, K42

Suggested Citation

Budzinski, Oliver and Grusevaja, Marina and Noskova, Victoriia, The Economics of the German Investigation of Facebook’s Data Collection (April 4, 2020). Available at SSRN: https://ssrn.com/abstract=3593236 or http://dx.doi.org/10.2139/ssrn.3593236

Oliver Budzinski (Contact Author)

Ilmenau University of Technology ( email )

Ilmenau, D-98684
Germany

HOME PAGE: http://www.tu-ilmenau.de/wth

Marina Grusevaja

RheinMain University of Applied Science ( email )

Bleichstrasse 44
Wiesbaden, 65183
Germany

Victoriia Noskova

Ilmenau University of Technology ( email )

Ilmenau, D-98684
Germany

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