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Competing for Cookies: Platforms’ Business Models in Data Markets with Network Effects

Author

Listed:
  • Sarit Markovich

    (Kellogg School of Management, Northwestern University, Evanston, Illinois 60201)

  • Yaron Yehezkel

    (The Haimovich Chair for Strategic Management, Coller School of Management, Tel Aviv University, Tel Aviv 6997801, Israel)

Abstract

We consider platform competition when platforms can (1) commercialize users’ data and in return offer their services for free (data-based business model); (2) protect users’ privacy and charge users for participation (subscription-based model); or (3) offer both options (the hybrid model). We find that competition does not always motivate the incumbent platform to protect users’ privacy. When network effects are intermediate, competition can motivate the incumbent to shift from the subscription-based model to the hybrid model, thereby increasing data commercialization. Yet, the opposite case occurs when network effects are weak. Moreover, allowing the incumbent to adopt the hybrid model is welfare enhancing when network effects are strong and welfare reducing (or neutral) otherwise.

Suggested Citation

  • Sarit Markovich & Yaron Yehezkel, 2026. "Competing for Cookies: Platforms’ Business Models in Data Markets with Network Effects," Management Science, INFORMS, vol. 72(2), pages 915-931, February.
    • Handle: RePEc:inm:ormnsc:v:72:y:2026:i:2:p:915-931
    DOI: 10.1287/mnsc.2024.07744
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    References listed on IDEAS

    as
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