This paper explores the relationship between two ubiquitous phenomena in the digital economy: online ad auctions and tracking cookies. The authors assess what happens to ad auction revenue when competing advertisers receive different kinds of information from their cookies. They find that the revenue to ad sellers like Google and Facebook changes dramatically based on ad auction structure and on the quantity and quality of information available to advertisers.
The more information a monopolist seller has about consumer preferences, the more power it has to price selectively and maximize profits. This paper analyzes the welfare consequences of price discrimination via market segmentation. The authors use formal mathematical arguments to show that a market can be segmented to produce all feasible surplus combinations. They conclude that consumer welfare can be prioritized through the proper structuring of information transmission and data collection.
Firms are increasingly turning to artificial intelligence to analyze marketplace trends and determine pricing strategies. This paper demonstrates how AI pricing algorithms may actually learn, with no human instruction, to set anti-competitive prices under standard economic conditions. The authors’ findings highlight the need for antitrust reform that recognizes the potential for algorithms to autonomously collude.
Following the advent of Amazon Web Services (AWS) in 2006, the cost of starting a new business substantially decreased, leading venture capital firms to adapt their investment approach. The authors analyze why investors are increasingly adopting the “spray and pray” investment approach in early stages, provide limited governance, and prefer businesses where the future potential is revealed quickly and cheaply. Additionally, they use the technological shock of AWS to explain the rise of new financial intermediaries such as accelerators.
DuckDuckGo is a search engine that prioritizes user privacy. It does not store user data and is free to use as a browser extension or mobile app. DuckDuckGo currently processes over 60 million search queries a day. In comparison, Google processes over 3.5 billion search queries a day. As of June 2020, DuckDuckGo had a share of approximately 1.5% in the market for search engines. This summary describes how DuckDuckGo works, its business model, competitors, and implications for innovation and competition policy.
A revolutionary approach to data ownership and privacy, Solid is a tech stack developed by the founder of the World Wide Web, Tim Berners-Lee. Solid’s mission is to decentralize the web by doing away with huge data silos, providing users ownership over their personal data, and reshaping the nature of competition among digital companies.
Brave is an open-source, privacy-focused browser that blocks third-party ads and is able to load pages twice as fast as Chrome or Firefox. It was founded in 2015 by the creator of Javascript and the Mozilla Project. This summary explains how Brave operates a decentralized digital ad-exchange using its own cryptocurrency, the Basic Attention Token (BAT). The BAT ecosystem rewards users for viewing ads, funds advertisers, and helps make the user attention market more transparent and efficient.