The Supply and Demand for Data Privacy: Evidence from Mobile Apps

80 Pages Posted: 6 Feb 2022 Last revised: 4 Apr 2023

See all articles by Bo Bian

Bo Bian

University of British Columbia

Xinchen Ma

London School of Economics & Political Science, Department of Finance, Students

Huan Tang

University of Pennsylvania - The Wharton School

Date Written: December 1, 2021

Abstract

This paper investigates how consumers and investors react to the standardized disclosure of data privacy practices. Since December 2020, Apple has required all apps to disclose their data collection practices by filling out privacy “nutrition” labels that are standardized and easy to read. We web-scrape these privacy labels and first document several stylized facts regarding the supply of privacy. Second, augmenting privacy labels with weekly app downloads and revenues, we examine how this disclosure affects consumer behavior. Exploiting the release of privacy labels and using the nonexposed Android version of each app to construct the control group, we find that after privacy label release, an average iOS app experiences a 14% (15%) drop in weekly downloads (revenue) when compared to its Android counterpart. The effect is stronger for more privacy-invasive and substitutable apps. Moreover, we observe negative stock market reactions, especially among firms that harvest more data, corroborating the adverse impact on product markets. Our findings highlight data as a key asset for firms in the digital era.

Keywords: Privacy labels, App Transparency Tracking Policy, Data protection, Mobile apps, Product Markets, Event studies

JEL Classification: D12, D22, G14, G30, L15, L86, Q01

Suggested Citation

Bian, Bo and Ma, Xinchen and Tang, Huan, The Supply and Demand for Data Privacy: Evidence from Mobile Apps (December 1, 2021). Available at SSRN: https://ssrn.com/abstract=3987541 or http://dx.doi.org/10.2139/ssrn.3987541

Bo Bian (Contact Author)

University of British Columbia ( email )

HA 865, UBC Sauder School of Business
2053 Main Mall, Vancouver, BC V6T 1Z2
Vancouver, British Columbia V6T 1Z2
Canada

HOME PAGE: http://bo-bian.com/

Xinchen Ma

London School of Economics & Political Science, Department of Finance, Students ( email )

London
Great Britain

Huan Tang

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

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