Abstract: Will the Do Not Track standard under development by the Worldwide Web Consortium actually enhance consumer welfare? Specifically, how will widespread adoption of DNT:1 (Do not track me) as a default setting, requiring consumers to opt-in to further tracking, affect the media landscape? To what extent will these changes reflect true consumer preferences about the tradeoffs between (not being tracked) and competing values, such as diversity, quality and innovativeness of media? Can these preferences ever be measured in a meaningful way? Indeed, can consumers effectively express their preferences? Or will the transactions costs of exercising simply force a shift to a new opt-in equilibrium and thus a reduction in advertising revenues and a resulting change in business models that perfectly informed consumers in a frictionless world would not have chosen? This paper will build upon existing work about architecture, especially Nudge by Richard Thaler and Cass Sunstein and the Opt-In Dystopias by Nicklas Lundblad and Betsy Masiello. In particular, we will consider how the latter's conceptual framework applies to DNT and to the effects it might have on ad-supported media and online services as well as analytics and other forms of data-drive innovation. How will DNT, and widespread DNT:1 default, affect not only (empowering users to choose) but also the (the choices available to users)? And how well will the stated intention of promoting privacy actually be served? What unintended, second-order effects might frustrate the noble intentions of those pushing DNT? Similar questions will be asked about browsers blocking third-party cookies by default along each of the four dimensions identified by Lundblad and Massiello: 1. Dual cost structure: users lack experience with the service and value it provides until after opting-in, and are thus biased against opting-in.2. Excessive scope: opt-ins encourage companies to ask for more data than they need.3. Desensitisation: users become accustomed to automatic opt-in.4. Balkanisation: the increased transactions costs of opt-in may drive media consolidation and the reemergence of walled gardens united by those companies best positioned to obtain opt-ins.The paper will summarize the technical mechanisms at issue and their potential economic consequences in a market for consumer choice. Our unique contribution will be to explain choice architecture in microeconomic terms, explaining how relatively trivial transactions costs like time, extra clicks, and convenient user interface can result in a paradox of privacy empowerment. We will expand upon a position paper submitted to the W3C last fall by offering greater detail, and surveying available data across a number of categories. On the demand side, this will include DNT:1 default rates and user adoption rates, how often and for which sites users opt-in to (e.g., by granting exceptions), behavioral economic data as to the preferences users reveal under various architectures as well as preferences asserted in opinion surveys. On the supply side, this will include data on how much more revenue various kinds of sites and services are able to earn through advertising and user uses of data depending on various restrictions placed upon their collection, processing, use and distribution of data. Further, we will consider the history and possible of the landscape for digital media and the various uses of data, inquiring as to these markets have developed given the recent equilibrium around tracking and how shifting that equilibrium might change the evolution of these services, such as from ad-supported web-based services towards apps that rely on different business models. Finally, we will consider how legal enforcement regimes might affect the landscape, including enforcement of voluntary commitments to respect DNT by self-regulatory bodies, the FTC and private litigants, as well as legislation that would empower the FTC to set standards and California's proposed law requiring companies to certify their policy regarding DNT.
Publication Year: 2013
Publication Date: 2013-03-31
Language: en
Type: article
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