Crémer, Jacques, Bergemann, Dirk, Dinielli, David, Groh, Carl-Christian, Heidhues, Paul, Schäfer, Maximilian, Scott Morton, Fiona, Seim, Katja and Sullivan, Michael (2023) Market Design for Personal Data. Yale Journal on Regulation, vol. 40 (n° 3). pp. 1056-1120.

Abstract

It is now generally understood that personal data––that is, data that relate to individual consumers––drive digital markets. Personal data underlie targeted advertising, which draws billions of dollars into ad-supported markets. Personal data are useful for other purposes as well. Firms in digital markets rely on personal data to deliver their core products and services––we refer to these collectively as “web services”1––to hone and improve them, and to recommend related products and services. These data facilitate innovation, allowing yet more services and “smart” products with increasingly personalized functionalities. Personal data can allow governments to deliver better public services, such as transportation systems, or can help researchers better understand how humans interact with algorithms and which policies might best serve society. And data can also facilitate competition, by improving quality and providing insight into consumer conduct that encourages entry. In these various ways, the massive quantity of personal data currently collected undoubtedly contributes to consumer welfare. But there also are downsides to the collection and use of personal data on such a grand scale. “Surveillance capitalism,” as Professor Shoshana Zuboff has termed it, has blurred the line between the personal and the public, and has commodified our habits, interests, and beliefs in ways that can feel distasteful and invasive. Massive data collection also has made information about us more accessible to government and commercial actors who often face little to no accountability for its misuse.