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The economics of the German investigation of Facebook's data collection

Author

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  • Budzinski, Oliver
  • Gruésevaja, Marina
  • Noskova, Victoriia

Abstract

The importance of digital platforms and related data-driven business models is ever increasing and poses challenges for the workability of competition in the respective markets (tendencies towards dominant platforms, paying-with-data instead of traditional money, privacy concerns, etc.). Due to such challenges, investigations of such markets are of high interest. One of recent cases is the investigation of Facebook's data collection practices by German competition authorities. Our paper, in contrast to the wide stream of legal studies on this case, aims to analyze whether Facebook's practices regarding data collection could constitute an abuse of market power from an economic perspective, more specifically against the background of modern data economics. In doing so we summarize the state of the advanced theories, including influences from behavioral economics, addressing such markets, and discuss four potential theories of harm.

Suggested Citation

  • Budzinski, Oliver & Gruésevaja, Marina & Noskova, Victoriia, 2020. "The economics of the German investigation of Facebook's data collection," Ilmenau Economics Discussion Papers 139, Ilmenau University of Technology, Institute of Economics.
    • Handle: RePEc:zbw:tuiedp:139
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    References listed on IDEAS

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    More about this item

    Keywords

    data economics; big data; economics of privacy; competition; Facebook case; paying-with-data; abuse of dominance; market power; digital economy;
    All these keywords.

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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