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The brave new world of digital personal assistants: benefits and challenges from an economic perspective

Author

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  • Oliver Budzinski

    (Ilmenau University of Technology)

  • Victoriia Noskova

    (Ilmenau University of Technology)

  • Xijie Zhang

    (Ilmenau University of Technology)

Abstract

The paper applies modern industrial economic theories to give an overview of the emerging phenomenon of digital personal assistants (DPAs). A DPA is an automated system that serves personal usage only and interacts with the user in natural language, meanwhile applying original and third-party services to obtain information and perform various actions. We analyze the economic benefits of increasing usage of DPAs, such as reduction of transaction costs, procompetitive effects, and boosting the e-commerce economy. Besides benefits, however, adopting DPA in life may also contain some risks and downsides, which may reduce the positive welfare effects or even lead to decreasing welfare: biased services, market power on the DPA market and economic dependence on a dominant DPA, potential leveraging of DPA suppliers’ market power into neighboring markets, personalized data (ab)use and privacy, media bias and manipulation of public opinion, and loss of autonomy. We identify the degree of effective competition and the degree of rationality of consumer behavior as the most relevant factors for either the advantages or the disadvantages to prevail and derive first regulatory implications.

Suggested Citation

  • Oliver Budzinski & Victoriia Noskova & Xijie Zhang, 2019. "The brave new world of digital personal assistants: benefits and challenges from an economic perspective," Netnomics, Springer, vol. 20(2), pages 177-194, December.
    • Handle: RePEc:kap:netnom:v:20:y:2019:i:2:d:10.1007_s11066-019-09133-4
    DOI: 10.1007/s11066-019-09133-4
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    Citations

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    Cited by:

    1. Thure Georg Weimann & Hannes Schlieter & Alfred Benedikt Brendel, 2022. "Virtual Coaches," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 64(4), pages 515-528, August.
    2. Noskova, Victoriia, 2021. "Voice assistants as gatekeepers for consumption? How information intermediaries shape competition," Ilmenau Economics Discussion Papers 161, Ilmenau University of Technology, Institute of Economics.
    3. Gaenssle, Sophia & Budzinski, Oliver, 2019. "Stars in social media: New light through old windows?," Ilmenau Economics Discussion Papers 123, Ilmenau University of Technology, Institute of Economics.
    4. Oliver Budzinski & Annika Stöhr, 2019. "Competition policy reform in Europe and Germany – institutional change in the light of digitization," European Competition Journal, Taylor & Francis Journals, vol. 15(1), pages 15-54, January.
    5. Tas, Serpil & Hildebrandt, Christian & Arnold, René, 2019. "Sprachassistenten in Deutschland," WIK Discussion Papers 441, WIK Wissenschaftliches Institut für Infrastruktur und Kommunikationsdienste GmbH.

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    More about this item

    Keywords

    Digital personal assistant; Platform economics; Economics of privacy; Competition economics; Behavioral economics; Digital economy;
    All these keywords.

    JEL classification:

    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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