Who Should Own the Data? --- The Impact of Data Ownership Shift from the Platform to Consumers

As Internet becomes an essential part of our daily life, consumers generate data through their own actions (their browsing histories, transaction records, geographic locations, etc.), and it becomes more and more common that consumers hand over their personal data to digital platforms (e.g. Google, Facebook or Taobao) in exchange for high-quality services. As “data is property”, should consumers claim their property rights over the data? New technologies emerge to empower consumers to control their own data, and the platform may need to compensate for the usage of such data. How consumers and the platform should react to such technologies, however, is not clear. We build a theoretical model in which consumers have different sensitivities towards their data ownership. We show that the impact of the data ownership shift depends not only on the platform’s revenue structure and consumers’ need for customized services, but also on the data compensation scheme. We find that when the platform can endogenously adjust its qualities of services provided to consumers who offer/do not offer their private data, the shift of data ownership may not necessarily benefit consumers, or harm the platform. The results of the welfare analysis offer insights into data regulations for market policy makers.