Periodic Reporting for period 1 - FreeDigital (The impact of 'free' digital offers on individual behavior and its implications for consumer and data protection laws)
Période du rapport: 2019-09-01 au 2022-08-31
Free offers are prevalent in nowadays online markets. We can communicate with our friends through social networks, store our files in clouds, navigate the city, manage our finances or even find a life partner using online products and services without paying a single penny. This, however, does not yet mean that we give nothing in exchange. We do provide our private information that might be profitably used by suppliers of free digital content.
FreeDigital looks at free digital offers and how they impact people’s behavior – their decisions about using free products and sharing their data with businesses offering free content. This project helps us understand whether there is room for improving consumers' welfare and what further measures could be implemented to achieve such an improvement.
The project carries important implications for policy makers and legislators regarding data and consumer protection laws. First, it shows that using deceptive or misleading description of products and services (such as “free” when a product involves non-monetary costs) may undermine consumer trust and confidence in the market in general and not only towards the business responsible for the deceptive practices. Second, it debunks the widespread belief that paid services are better for consumers regarding privacy and contractual risks than free services. Paid services may thus require as much attention from the policymakers and enforcers as free services. Finally, policymakers may need to reconsider in which situations businesses should be required to obtain from consumers an explicit opt-in for data collection and processing.
FreeDigital looks at free digital offers and how they impact people’s behavior – their decisions about using free products and sharing their data with businesses offering free content. This project helps us understand whether there is room for improving consumers' welfare and what further measures could be implemented to achieve such an improvement.
The project carries important implications for policy makers and legislators regarding data and consumer protection laws. First, it shows that using deceptive or misleading description of products and services (such as “free” when a product involves non-monetary costs) may undermine consumer trust and confidence in the market in general and not only towards the business responsible for the deceptive practices. Second, it debunks the widespread belief that paid services are better for consumers regarding privacy and contractual risks than free services. Paid services may thus require as much attention from the policymakers and enforcers as free services. Finally, policymakers may need to reconsider in which situations businesses should be required to obtain from consumers an explicit opt-in for data collection and processing.
The results generated within FreeDigital show that free digital goods and services do not impose higher non-monetary costs on consumers than paid ones. This means that paying money does not necessarily guarantee better privacy protection and lower contractual risks. As such, consumers should be cautious when deciding for paid products instead of free ones. It also highlights that policymakers may need to scrutinize paid digital goods and services as closely as the free ones.
At the same time, the data collected demonstrates that free digital goods and services are diverse – some might be truly beneficial for consumers, while others do indeed impose high non-monetary costs by displaying advertisement, engaging in extensive collection and processing of consumers data and providing no contractual protection. Calling such products and services ‘free’ is misleading and may backfire in the long term. The project provides evidence that people are indeed reluctant to accept even truly beneficial free offers because they don’t find them trustworthy.
Finally, the law distinguishes between collection of consumer data to personalize services that consumers agreed to be provided with and to personalize advertisement. In the latter case, businesses need to obtain consumer consent for data processing. The experiments conducted within FreeDigital show that people’s attitudes do not reflect this legal distinction – consumers are as unwilling to share their data when it is collected and processed in order to provide services contracted for as when it is processed to provide third-party advertisement. This holds regardless of the price of the product. Yet, in general, people are much more willing to share their data with providers of free than paid products.
The project was presented at 15 international and local conferences, workshops and seminars. To spread the results of the project and popularize empirical methods in law, the following events were organized: two workshops and a panel discussion, two summer schools and a seminar series. The Fellow participated in multiple soft skill courses and an intensive training within Female Science Talents Intensive Track organized by the Falling Walls foundation. Results of the project are described in a report and three working papers that will soon be submitted to peer-reviewed journals. Finally, the Fellow edited a special issue of a Technology and Regulation journal and served as a reviewer for two conferences and two journals.
At the same time, the data collected demonstrates that free digital goods and services are diverse – some might be truly beneficial for consumers, while others do indeed impose high non-monetary costs by displaying advertisement, engaging in extensive collection and processing of consumers data and providing no contractual protection. Calling such products and services ‘free’ is misleading and may backfire in the long term. The project provides evidence that people are indeed reluctant to accept even truly beneficial free offers because they don’t find them trustworthy.
Finally, the law distinguishes between collection of consumer data to personalize services that consumers agreed to be provided with and to personalize advertisement. In the latter case, businesses need to obtain consumer consent for data processing. The experiments conducted within FreeDigital show that people’s attitudes do not reflect this legal distinction – consumers are as unwilling to share their data when it is collected and processed in order to provide services contracted for as when it is processed to provide third-party advertisement. This holds regardless of the price of the product. Yet, in general, people are much more willing to share their data with providers of free than paid products.
The project was presented at 15 international and local conferences, workshops and seminars. To spread the results of the project and popularize empirical methods in law, the following events were organized: two workshops and a panel discussion, two summer schools and a seminar series. The Fellow participated in multiple soft skill courses and an intensive training within Female Science Talents Intensive Track organized by the Falling Walls foundation. Results of the project are described in a report and three working papers that will soon be submitted to peer-reviewed journals. Finally, the Fellow edited a special issue of a Technology and Regulation journal and served as a reviewer for two conferences and two journals.
FreeDigital debunks the widespread belief that paid services are better for consumers regarding privacy and contractual risks than free services. In contrast to existing behavioral research, it provides evidence that people do not necessarily overreact to free offers. To the contrary – many forgo free truly beneficial offers because they find them suspicious. Finally, people’s attitudes towards data sharing do not reflect existing legal distinctions.
FreeDigital demonstrates that experimental and empirical data more generally provide important insights for policymakers and help improve existing legislation by accounting for consumers’ behavioral reactions and attitudes that do not always reflect our intuitions and widespread beliefs. By combining observational data with behavioral experiments and experimental vignette studies, the project itself shows that in order to better understand one specific aspect of consumer markets, one need to adopt various methodological approaches.
FreeDigital demonstrates that experimental and empirical data more generally provide important insights for policymakers and help improve existing legislation by accounting for consumers’ behavioral reactions and attitudes that do not always reflect our intuitions and widespread beliefs. By combining observational data with behavioral experiments and experimental vignette studies, the project itself shows that in order to better understand one specific aspect of consumer markets, one need to adopt various methodological approaches.