Presentation delivered during 9th Seminar on Media and Digital Economy (21-22 March 2019, Florence).
http://fsr.eui.eu/event/annual-scientific-seminar-on-media-and-the-digital-economy-9th-edition/
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Collecting and Selling Personal Information: the Two Faces of Data Brokers (David Bounie, Antoine Dubus, Patrick Waelbroeck)
1. Collecting and Selling Personal
Information:
the Two Faces of Data Brokers
David Bounie, Antoine Dubus, Patrick Waelbroeck
2. Introduction
• 2014: Oracle acquires Datalogix and Bluekai
– Datalogix:
• “Datalogix connects offline purchasing data to digital
media to improve audience targeting”
• “Datalogix aggregates and provides insights on over $2
trillion in consumer spending to deliver purchase-based
targeting and drive more sales.”
3. Introduction
– Bluekai:
• “runs the world's largest 3rd party data marketplace to
augment a customer's proprietary data with actionable
information on more than 700 million profiles.”
4. Question 1
• How does competition between data brokers
change their strategies of
– Information collection
– Information selling
5. Question 2
• What are the effects of competition between
data brokers on
– Consumer surplus
– Firms profits
6. Literature
– Bloch Demange 2018:
• endogenous collection of consumer information by a
monopolist
– Casadesus Massanell & Hervas Drane 2015:
• Privacy as competitive factor
• Competition encourages firms to lower the collection of
consumer information (unless they have a low willingness
to pay)
– Kesler & al. 2017:
• Empirically, competition between firms decreases
consumer information collection
16. Description of the model
• Data brokers compete in the price 𝑤𝑙(𝑘) and
the information partition that they sell.
17. Description of the model
• Each Data broker knows the precision of
information of its competitor
• Each firm knows whether its competitor has
acquired information and which one
18. Description of the model
• Timing:
– Stage 1: data brokers collect consumer
information with precision 𝑘1, 𝑘2
– Stage 2: data brokers set information structures
and sell them
– Stage 3: both firms set their prices and compete
29. Implications
• Data collection, selling and competition:
• Competition increases the precision of
information collected by the dominant data
broker
• Decreases the precision of information collected
by the smallest data broker or by both of them
when they are symmetric
• Data brokers sell more information when they
compete
31. Implications
• The higher precision of information increases the
rent extraction effect
• The increase in the share of consumers identified
increases the competitive effect of information
• The latter dominates the former and consumer
surplus increases
33. Implications
• Information is more valuable for firms since the
dominant data broker collects more information
under competition
• Firms pay a lower price for better information
since data brokers compete in price, but this gain
is lower than the loss due increased competition
34. Implications
• Data protection laws and competition laws go in
opposite directions:
• Competition authorities prefer competition
between data brokers as it intensifies
competition on the product market and
benefits consumers
• Data protection authorities prefer data
brokers not to compete when they are
asymmetric in terms of market shares as the
dominant data broker collects more consumer
information
