Value Creation by Ad-Funded Platforms

37 Pages Posted: 24 Jan 2022

Date Written: 2022


We identify features of interactions on online platforms that make an ad-funded business model attractive for the platform, but also for consumers. We then show that ad-funded platforms heavily rely on data for their ability to create value for their users. Formally, we show that data restrictions may trigger a switch away from ad-funded to fee-funded model, resulting in a loss of consumer welfare. We also argue that restricting the effort to increase data quality weakens competition to the detriment of consumers.

Keywords: ad-funded business model, data aggregation restrictions, targeted advertising, platform competition, merchant competition, transaction costs

JEL Classification: K210, L220, L400, M370

Suggested Citation

Langus, Gregor and Lipatov, Vilen, Value Creation by Ad-Funded Platforms (2022). CESifo Working Paper No. 9525, Available at SSRN: or

Gregor Langus (Contact Author)

CompetitionSphere ( email )


Vilen Lipatov

CompetitionSphere ( email )


Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics