Prominence-for-Data Schemes in Digital Platform Ecosystems: Economic Implications for Platform Bias and Consumer Data Collection

Abstract

It is crucial for content providers (CPs) to appear prominently on dominant online platforms in order to attract consumer demand. Apart from organic search results, content providers can obtain such prominence also in return for a monetary payment to the platform, e.g., in the form of sponsored search results. In this article, we investigate some of the economic consequences, if such payment can also be made with consumers’ data instead of money. Since data is non-rivalrous, the economic effects of data sharing for prominence are more complex and differ from paying for prominence. In a game-theoretic model we show that more consumer data will be collected as soon as CPs can obtain prominence on the platform. Whether the platform is more biased under a prominence-for-money scheme or under a prominence-for-data scheme depends on the marginal value of shared (non-exclusive) data. If this value is high, prominence-for-data will yield a higher platform bias, lead to more data collection by the CPs, and ultimately lower consumer surplus. Our results therefore bear important insights for the regulation of data-rich online platforms.