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New Discussion Paper on Facebook’s Data Collection

FG Wirtschaftstheorie

Prof. Dr. Oliver Budzinski (Ilmenau University of Technology), Prof. Dr. Marina Grusevaja (Wiesbaden Business School - RheinMain University of Applied Science) & Victoriia Noskova, M. Sc. (Ilmenau University of Technology) have published a discussion paper on the topic: The Economics of the German Investigation of Facebook's Data Collection.

The importance of digital platforms and related data-driven business models is ever increasing and poses challenges for the workability of competition in the respective markets (tendencies towards dominant platforms, paying-with-data instead of traditional money, privacy concerns, etc.). Due to such challenges, investigations of such markets are of high interest.

One of recent cases is the investigation of Facebook’s data collection practices by German competition authorities (Bundeskartellamt). In this paper, the authors analyze whether Facebook’s practices regarding data collection could constitute an abuse of market power from an economic perspective, more specifically against the background of modern data economics. In doing so they summarize the state of advanced economic theories, including influences from behavioral economics, addressing such markets, and discuss four potential theories of harm.

Victoriia Noskova gratefully acknowledges financial support from the FAZIT-Stiftung.