Facebook isn't free: zero-price companies overcharge consumers with data

Abstract

AbstractThe emergence of dominant companies that don't charge money to their primary consumers poses serious challenges to current antitrust law around the world. This paper suggests an approach to regulating these ‘zero-price’ companies that considers the data consumers give up to use them as the ‘price’ they pay. The ‘data as price’ model acts as a starting point to assess whether consumers are being ‘overcharged’ by Facebook in the status quo compared to how much data they would give up in a more competitive social media landscape. By surveying thousands of participants and assessing a litany of relevant behavioural considerations, this paper finds that customers are overpaying for Facebook, and that this may come at a serious welfare cost to millions of consumers. While further analysis is warranted, there is substantial cause for concern, and for critical re-evaluation of the standards generally used by antitrust regulators around the world to regulate companies such as Facebook.