Data Portability on the Internet: An Economic Analysis

Data portability allows users to transfer data between competing online services. As data gets increasingly valuable for online services and users alike, the enforcement of data portability within the European Union by the General Data Protection Regulation will have important ramifications for the...

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Bibliographic Details
Published in:Business & information systems engineering 2019-10, Vol.61 (5), p.551-574
Main Author: Wohlfarth, Michael
Format: Article
Language:English
Subjects:
Business and Management
IT in Business
Research Paper
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Summary:Data portability allows users to transfer data between competing online services. As data gets increasingly valuable for online services and users alike, the enforcement of data portability within the European Union by the General Data Protection Regulation will have important ramifications for the competition in online markets. Thus, this paper develops a game-theoretic model to examine firms’ strategic reaction to data portability and to identify the ensuing market outcomes. It can be shown, among others, that although data portability is designed to protect users, they may be hurt because market entrants have an incentive to increase the amount of collected data compared to a regime without data portability. However, profits for new services and total surplus increase if the costs for implementation are not too large. This likely improves innovation and service variety. Consequently, the results provide important insights and case-specific recommendations for managers and policy makers in data-driven online markets.
ISSN:2363-7005
1867-0202
DOI:10.1007/s12599-019-00580-9