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Returns to Data: Evidence from Web Tracking

Author

Listed:
  • Ullrich, Hannes
  • Hannane, Jonas
  • Peukert, Christian
  • Aguiar, Luis
  • Duso, Tomaso

Abstract

Tracking online user behavior is essential for targeted advertising and is at the heart of the business model of major online platforms. We analyze tracker-specific web browsing data to show how the prediction quality of consumer profiles varies with data size and scope. We find decreasing returns to the number of observed users and tracked websites. However, prediction quality increases considerably when web browsing data can be combined with demographic data. We show that Google, Facebook, and Amazon, which can combine such data at scale via their digital ecosystems, may thus attenuate the impact of regulatory interventions such as the GDPR. In this light, even with decreasing returns to data small firms can be prevented from catching up with these large incumbents. We document that proposed data-sharing provisions may level the playing field concerning the prediction quality of consumer profiles.

Suggested Citation

  • Ullrich, Hannes & Hannane, Jonas & Peukert, Christian & Aguiar, Luis & Duso, Tomaso, 2024. "Returns to Data: Evidence from Web Tracking," CEPR Discussion Papers 19266, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:19266
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    File URL: https://cepr.org/publications/DP19266
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    Cited by:

    1. Paul Heidhues & Mats Köster & Botond Kőszegi & Botond Köszegi, 2024. "A Theory of Digital Ecosystems," CESifo Working Paper Series 11332, CESifo.

    More about this item

    Keywords

    Prediction quality; Web tracking; Cookies; Data Protection; Competition policy; Internet regulation; Gdpr;
    All these keywords.

    JEL classification:

    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L4 - Industrial Organization - - Antitrust Issues and Policies

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