Personal data and free smartphone application

In the market for smartphone applications, the majority of apps are zero priced. In order to generate revenue, developers have to monetize theirs apps, however little is known about their monetization strategies. The theoretical literature underlines the importance of personal data for Internet companies' strategies, but the implications of personal data in the smartphone applications market remains rather unexplored. We provide empirical evidence of the monetization strategies related to free apps by studying how personal data collection is combined with more traditional sources of revenue such as advertising and in-app purchases. We have unique data measuring how apps are monetized. In our dataset, 9\% of apps use exclusively personal data as monetization strategy, and 22,5\% use only advertising and in-app purchase is used exclusively by 4\% of apps. We combine data on 475,867 free applications available on the Google Play platform, with data on applications' privacy-related behaviors provided by PrivacyGrade. Empirically, we find that apps collecting personal data are 15,6\% more likely to do advertising suggesting complementarity between collection of personal data. Personal data are used by established apps with large number of downloads. Successful appsare more likely to collect personal data rather than doing advertising.