Privacy, Data and Competition: The Case of Apps for Young Children

Abstract

How does firm size affect privacy protections offered to customers? On the one hand, it could be that larger firms use their size to amass more data. On the other hand, smaller firms may be less careful in their data protection practices. We empirically analyze a special subset of apps where privacy concerns are very important - apps targeted at very young children. Our results suggest that larger firms offer more privacy protections to young children than smaller firms. Larger app developers request fewer pieces of sensitive data from consumers. This effect is stronger in countries with laxer standards of privacy protection. We also investigate whether a platform can help regulate privacy protection successfully, and we find that self-certification programs offered by platforms can help reduce data collection from children.

Keywords: data and competition, economics of privacy, apps for young children

JEL Classification: D82, D83, M31, M37