When Private Information Settles the Bill: Money and Privacy in Google’s Market for Smartphone Applications

Michael Kummer, Patrick Schulte

Research output: Contribution to journalArticlepeer-review

18 Citations (Scopus)
62 Downloads (Pure)

Abstract

We shed light on a money-for-privacy trade-off in the market for smartphone applications (“apps”). Developers offer their apps at lower prices in return for greater access to personal information, and consumers choose between low prices and more privacy. We provide evidence for this pattern using data from 300,000 apps obtained from the Google Play Store (formerly Android Market) in 2012 and 2014. Our findings show that the market's supply and demand sides both consider an app's ability to collect private information, measured by the apps's use of privacy-sensitive permissions: (1) cheaper apps use more privacy-sensitive permissions; (2) given price and functionality, demand is lower for apps with sensitive permissions; and (3) the strength of this relationship depends on contextual factors, such as the targeted user group, the app's previous success, and its category. Our results are robust and consistent across several robustness checks, including the use of panel data, a difference-in-differences analysis, “twin” pairs of apps, and various measures of privacy-sensitivity and app demand.

Original languageEnglish
Pages (from-to)3470–3494
Number of pages25
JournalManagement Science
Volume65
Issue number8
Early online date23 Apr 2019
DOIs
Publication statusPublished - Aug 2019

Keywords

  • Android
  • Demand for private information
  • Mobile applications
  • Permissions
  • Privacy
  • Supply

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