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Competition and privacy in online markets: Evidence from the mobile app industry

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  • Kesler, Reinhold
  • Kummer, Michael E.
  • Schulte, Patrick

Abstract

Policy makers are increasingly concerned about the combination of market power and massive data collection in digital markets. This concern is fueled by the theoretical prediction that more market power causes firms to collect ever more data from their users. We investigate the relationship between market power and data collection empirically. We analyze data about more than 1.5 million mobile applications in several thousand submarkets of Google's Play Store. We observe these data for over two years and combine information on an app's data collection with information about its competitive environment. Our analysis highlights a robust positive relationship between market power and data collection. We find that more data are being collected in concentrated markets, and apps with higher market shares collect more data. This pattern robustly emerges across a series of cross-sectional and panel regressions as well as a series of specifications that exploit exogenous variation.

Suggested Citation

  • Kesler, Reinhold & Kummer, Michael E. & Schulte, Patrick, 2019. "Competition and privacy in online markets: Evidence from the mobile app industry," ZEW Discussion Papers 19-064, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:19064
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    References listed on IDEAS

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    Cited by:

    1. Pauline Affeldt & Reinhold Kesler, 2021. "Competitors’ Reactions to Big Tech Acquisitions: Evidence from Mobile Apps," Discussion Papers of DIW Berlin 1987, DIW Berlin, German Institute for Economic Research.

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    More about this item

    Keywords

    Competition; Market Power; Privacy; User Data; Apps;
    All these keywords.

    JEL classification:

    • L17 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Open Source Products and Markets
    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • D29 - Microeconomics - - Production and Organizations - - - Other

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