Privacy-Friendly Business Models for Location-Based Mobile Services

Abstract

This paper presents a theoretical model to analyze the privacy issues involved in business models for location-based mobile services. We report the results of an exploratory field experiment in Switzerland that assessed the factors driving the net payoff to users of mobile businesses. We found that (1) the personal data disclosed by users has a negative effect on user payoff; (2) the amount of personalization available has a direct and positive effect, as well as a moderating effect, on user payoff; and (3) the amount of control over a user’s personal data has a direct and positive effect, as well as a moderating effect, on user payoff. The results suggest that privacy protection could be the main value proposition in the B2C mobile market. From our theoretical model, we derive a set of guidelines to design a privacy-friendly business model pattern for third-party services. We discuss four examples to show how the mobile platform can play a key role in the implementation of these new business models.