Research

Google, Apple, Facebook, Amazon - the world's most valuable companies have one thing in common: exclusive access to their users' data. What impact does this have on competition in digital markets? How does access to data influence innovation and consumers in markets that are in the process of digitization? The junior research group "Data Policies" at the University of Passau is investigating these questions, among others, and is receiving funding from the Bavarian State Ministry of Science and the Arts as part of the Bavarian Research Institute for Digital Transformation (bidt).

The business models and platform structure of large Internet companies are fundamentally changing competition in digital markets: Google, Apple, Facebook, Amazon dominate the economy with sums that are in some cases larger than the output of some European states. The key to success lies in the raw material of the new economy: user data. This serves as a source of innovation and competitiveness - at the same time, the companies are using it to further expand their powerful market position: After all, more data improves services, which in turn attracts more customers, who in turn supply even more data.

What market laws apply in the New Economy? And how can these be sensibly regulated? What strategies should companies and start-ups pursue in digital competition with regard to access to data? A team led by Dr. Daniel Schnurr, Academic Councilor and Research Group Leader at the University of Passau, is investigating these questions as part of the project "Data Neutrality & Open Access: Coherent Economic Policies for the Digital Economy." The researchers analyze these questions with the help of game-theoretical models and test the theoretical results in economic laboratory experiments as well as with computer simulations.

Websites and apps in the Facebook dilemma

Take, for example, the dilemma that websites and apps can face when they use the social login of Facebook or other platform operators: First, this gives website A a competitive advantage over website B, for example. Because A can now show users individually tailored advertising, but also provide personalized services. Competitor B is forced to follow suit and also implements the login. The competitive advantage is put into perspective. The winner is Facebook. "The social network is doing better, the websites on the advertising market in some cases even worse," explains Dr. Daniel Schnurr. And it could get worse for the websites. For example, if Facebook takes advantage of its increasing strategic dependence to monetize the social login for a fee or to change the terms of use for the websites to their disadvantage.

The scientist's advice to website operators and app providers: "Websites should carefully consider whether the short-term competitive advantage is actually worth it and how they can counteract negative consequences in the long term." The only question is: Do websites really have a choice? That's another question the Passau research group will investigate. It's about market power and its possible abuse - as well as the question of whether and how the position of the major platform operators can be meaningfully regulated. In addition to measures and rules that could directly affect the companies, the research group is also examining proposals aimed at giving users more effective control over their data. In this context, the research team is analyzing the possible effects of the new EU Data Protection Regulation, which will apply from May 2018. For example, it grants users the right to data portability.