How to Share Information with Third Parties while Protecting User Privacy on Internet Platform

Abstract Internet have radically transformed how people live their lives, especially in the COVID-19 pandemic. People rely on various Internet platforms in daily life, such as e-commerce platforms, social media platforms, etc. With the time going, Internet platforms have accumulated more and more personal information about their users or customers. In order to improve user experience and increase their profits, Internet platforms are willing to open their interfaces to third parties and share users’ information with them. Internet platform gains revenue by providing services for users, the users get utility by Internet platform. At the same times, the third parties enhance users experience by providing diversity services, and gain revenue and users' data. However, such kind of sharing may infringe users’ privacy and then erode users’ trust, especially for those users with higher privacy concerns. This paper tries to find out how Internet platforms can walk a fine line between sharing users’ information and protecting their privacy. Firstly, we analysis the cost-benefit of stakeholders. Then, we propose a pyramid model that captures the interaction between the users, Internet platform, and third parties. Specifically, we focus on the influence of user privacy sensitivity on information sharing behavior of Internet platform. We construct a three-stage dynamic game model with complete information to obtain the threshold value of third parties under the equilibrium state. The result shows that unrestrained sharing of user’ information with third parties will bring negative effects for Internet platforms and finally reduce their profits. The most advantageous way is to develop differentiated privacy policies for users with different privacy preferences. Those users with higher privacy concerns can pay some membership fee to enjoy the service provided by an Internet platform without the disturbance from various third parties.