The Value of Personal Data in Internet Commerce: A High-Stake Field Experiment on Data Regulation Policy

Tianshu Sun (), Zhe Yuan (), Chunxiao Li, Kaifu Zhang and Jun Xu
Additional contact information
Tianshu Sun: Marshall School of Business, University of Southern California, Los Angeles, CA 90089 United States
Zhe Yuan: School of Economics, Zhejiang University, Hangzhou 310000 China
Chunxiao Li: Alibaba Group
Kaifu Zhang: Alibaba Group
Jun Xu: Alibaba Group

No 21-10, Working Papers from NET Institute

Abstract: Personal data has become a key input in Internet Commerce, facilitating the matching between millions of customers and merchants. Recent data regulations in China, Europe and US restricts Internet platforms' ability to collect and use personal data for personalized recommendation and may fundamentally impact Internet Commerce. In collaboration with the world's largest E-commerce platform, we conduct a large-scale field experiment to measure the potential impact of data regulation policy, and to understand the value of personal data in Internet Commerce. For a random subset of 555,800 customers on Alibaba platform, we simulate the regulation by banning the use of personal data in the homepage recommendation algorithm and record the matching process and outcomes between these customers and merchants. Compared to the control group with personal data, we observe a significant higher concentration in the algorithmic recommendation of products in the treatment group and a very sharp decrease in the matching outcomes as measured by both customer engagement (clickthrough rate and product browsing) and market transaction (GMV). The negative effect is disproportionate and more pronounced for niche merchants and customers who would benefit most from E-commerce. We discuss the economic impact of data regulation on Internet Commerce, as well as the role of personal data in generating value and fostering innovations.

Keywords: Personal Data; Privacy Regulation; E-commerce; Field experiments; Personalization; Market Structure (search for similar items in EconPapers)
Pages: 65 pages
Date: 2021-10
New Economics Papers: this item is included in nep-exp, nep-ict, nep-pay and nep-reg
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Citations: View citations in EconPapers (1)

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