Platform Neutrality and Data-Driven Business Models: B2B Data Sharing as Payment for Prominence of Content Providers on Online Platforms

• Applicant: Professor Dr. Jan Krämer
• Subject Area: Accounting and Finance
• Term: from 2018 to 2022
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 409474477

Online platforms (e.g. Amazon, Facebook or Google) assume an important role as central gatekeepers in the Internet ecosystem, mediating the business relationship between consumers, on the one hand, and content providers (CPs), on the other hand. The main purpose of online platforms is to organise the available content in an effort to facilitate the consumers' discovery process for content. However, this also means that online platforms have the ability to steer consumers towards specific CPs by giving them more prominence on their platform. It is common practice that platforms sell prominence to CPs (e.g. sponsored search results). Moreover, some platforms have been accused of grating their own affiliated CPs more prominence than independent CPs (e.g. in the EU anti-trust case on Google Shopping). This has spurred an academic and political debate, especially in the EU, whether it is justified to enact "neutrality" regulation for online platforms, akin to the existing "net neutrality" regulation for Internet Service Providers, whereby platforms need to present content in a non-discriminatory way.A relatively new phenomenon in this context is that platforms grant some CPs prominence in return for access to those CPs' (user) data. For example, through its accelerated mobile pages (AMP) project, Google is able to attain the usage statistics of unaffiliated websites that are accessed via AMP, and, at the same time AMP-enabled websites are listed higher in the mobile search results page. Despite its practical and political relevance, so far the economic literature has not considered business-to-business (B2B) data sharing as an alternative means for payment by CPs in order to gain prominence on online platforms. However, B2B data sharing has many implications that render this scenario very different to payment in money. Most importantly, data is non-rivalrous, which means that it can be duplicated effortlessly. This implies that the welfare effects of a payment in data are far more complex, because welfare is not simply shifted from the sender to the recipient of the payment.The objective of this interdisciplinary project is to advance theory on the business and welfare implications of B2B data sharing as a prerequisite for granting prominence on dominant online platforms. To this end, two game-theoretic model frameworks are to be devised and analysed. Thereby, one model focuses on advertisement-based business models, where CPs can make use of data to improve their ad targeting ability. The other model focuses on subscription-based business models, where CPs can make use of data to improve the personalisation of content. The expected outcomes of this project are not only novel from a theoretical perspective, but also highly relevant for informing the ongoing policy debate on the need for regulating dominant online platforms in the context of platform neutrality.

• DFG Programme: Research Grants