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

https://drive.google.com/open?id=1EStRdzf3NopRc48tzeuxHLVobTPcNVv8&usp=drive_fs

Personal data has become a key input in Internet Commerce, facilitating the matching betweenmillions of customers and merchants. Recent data regulations in China, Europe and US restrictsInternet platforms' ability to collect and use personal data for personalized recommendationand may fundamentally impact Internet Commerce. In collaboration with the largest E- commerce platform in China, we conduct a large-scale field experiment to measure the potential impact of data regulation policy, and to understand the value of personal data inInternet Commerce. For a random subset of 555,800 customers on Alibaba platform, wesimulate the regulation by banning the use of personal data in the homepage recommendationalgorithm and record the matching process and outcomes between these customers andmerchants. Compared to the control group with personal data, we observe a significant higherconcentration in the algorithmic recommendation of products in the treatment group andavery sharp decrease in the matching outcomes as measured by both customer engagement (clickthrough rate and product browsing) and market transaction (sales volume and amount). The negative effect is disproportionate and more pronounced for niche merchants andcustomers who would benefit more from E-commerce. We discuss the potential economic impact of data regulation on Internet Commerce, as well as the role of personal data ingenerating value and fostering