Credit, Privacy, and Data Monetization by Digital Platforms

摘要

Digital platforms collect extensive personal information from users while often also providing credit services. We study the interaction between data use and credit provision. Data use creates incentives for a monopolistic platform to subsidize credit, enabling it to compete with traditional financial institutions even when it faces higher costs. Credit services allow the platform to manipulate buyers’ outside options, extract greater surplus, and raise the value of using data. This may lead to socially inefficient outcomes. When platform competition is considered, platforms may specialize, with some focusing on data use and others on privacy. When credit provision is possible, the set of parameters under which platforms use buyers’ data expands. Finally, under certain conditions, a platform monetizes its data by selling it to a platform that specializes solely in credit services.