Sharing is (not) caring: strategic information disclosure and platform’s business model

We analyze how data and data sharing influence the strategic interactions between a monopolistic platform and the many sellers operating within the digital marketplace. We investigate the effects of data sharing on market outcomes when data represent information about users’ preferences and can be used to price discriminate them. First, the platform would strategically share data only with those sellers it does not want to compete with (i.e., the efficient ones) as it can exploit their efficiency through its revenue-sharing fee. Second, data sharing increases the platform’s profit and decreases consumer surplus, while the overall effect on third-party sellers is ambiguous. Finally, when considering the possibility for sellers to offer their products directly to consumers, bypassing the platform, data sharing is highly pro-competitive since the platform is pushed to lower its prices to retain all consumers who would be tempted to buy products through sellers’ direct channels.