The good news first: Users stand to benefit from the additional services offered by large online platforms, at least when convenience is more important to them than privacy. The bad news for websites and merchants that adopt such services is that revenues may decline after adoption, yielding a 'data-sharing-dilemma': 'They may have short-term incentives to adopt a social login but suffer negative economic impact in the long run', write information system experts Professor Jan Krämer, Dr. Daniel Schnurr and Dr. Michael Wohlfarth in an article for the MIT Sloan Management Review (the article is free to all visitors on March 5 and 6).
The researchers point out that many popular services that large online platforms make available to smaller websites or merchants, can be used to obtain more competition-relevant data. Although these services are appealing, because they can attract users, the loss of proprietary information about these users can weaken the competitive position of the websites and merchants vis-à-vis the platform, and hence create a data-sharing dilemma.
The research highlight in particular that the following popular services, among others, have the potential to yield such a data-sharing dilemma :
![[Translate to English:] Whiteboard mit theoretischen Gedankenmodellen zu den Effekten von Social Logins und anderen Diensten der großen Plattformen](/fileadmin/_processed_/7/f/csm_Whiteboard_dfc09df262.jpg)
According to the researchers, the described services seem particularly appealing to small organizations and start-ups. However, the gained advantages last only until the competing providers upgrade as well.
,Our findings point to a strategic challenge in today’s digital ecosystem‘, write the information system experts. ‚Our research shows that content and service providers run the risk of dependency and exploitation when entering into data-sharing agreements with them.‘
Ways to avoid the login trap
The research team also describes various options by which website operators can mitigate the risks. Among others, they recommend building alliances with competitors ,instead of reinforcing the power of giant online platforms‘. They see blockchain technology as a new opportunity to ‚reinvigorate the concept of a decentralized log-in structure‘.
About the authors
Professor Jan Krämer holds the Chair of Internet and Telecommunications Business of the University of Passau since 2014. Moreover, he is a Research Fellow at the Centre on Regulation in Europe (CERRE), a Brussels-based think tank. Prior to that, he led the research group ‘Telecommunication Markets’ at the Karlsruhe Institute of Technology (KIT).
Dr. Daniel Schnurr heads the Data Policies research group at the University of Passau, which is funded by the Bavarian Ministry of Education, Science and the Arts within the framework of Center Digitisation.Bavaria (ZD.B). The research group cooperates closely with the Chair of Internet and Telecommunications Business held by Professor Jan Krämer.
Dr. Michael Wohlfarth used to work as a junior researcher at the Chair of Internet and Telecommunications Business. His thesis focusses on ,Data as a Competitive Resource‘.
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