Competition and Privacy in Online Markets: Evidence from the Mobile App Industry

Abstract

Policy makers are increasingly concerned about the combination of market power and massive data collection in digital markets. This concern is fueled by the theoretical prediction that more market power causes firms to collect ever more data from their users. We investigate the relationship between market power and data collection empirically. We analyze data about more than 1.5 million mobile applications in several thousand submarkets of Google's Play Store. We observe these data for over two years and combine information on an app's data collection with information about its competitive environment. Our analysis highlights a robust positive relationship between market power and data collection. We find that more data are being collected in concentrated markets, and apps with higher market shares collect more data. This pattern robustly emerges across a series of cross-sectional and panel regressions as well as a series of specifications that exploit exogenous variation.

Variety-Based Congestion in Online Markets: Evidence from Mobile Apps

“…Apps can also be classified into a larger number of types based on alternative criteria, as inKesler, Kummer and Schulte (2020). However, it is likely that app developers think about their apps in terms of the 18 post recategorization types because the Apple App Store already had that category structure for years and developers often multi-home.14 There are two possible drawbacks to this approach: (i) Approximately 1% of games exit the market before re-categorization and cannot be classified in this way.…”