Social Disadvantages of Privacy? Its Convergent Consequences for the Access to App-based Education

Privacy regulations have the potential to inadvertently hinder access to app-based education for non-paying users. This could occur through two adaptation reactions—the erection of paywalls or the escalation of the frequency of advertisements—that have convergent consequences for access. Whether privacy regulation deprives learners of their free of charge access to education apps and of time spent on actually learning has remained obscure, as well as privacy’s social disadvantages in general. To inform public policymakers, we study in a difference-in-differences analysis the access and quality consequences of Apple’s 2019 ban on targeted advertising in child-directed education apps. We find that the ban, on average, reduced the likelihood that a child-directed education app is free by 1.7 percent. In apps remaining free of charge, the perceived app quality declined. The degraded app quality can be attributed to the escalation of the ad frequency causing distraction. Both the reduction in free access and the degradation of app quality were driven by high-quality apps. Learners with special educational needs were exposed to an increasing number of ads as well. These findings push forward the frontiers of knowledge of the consequences of privacy regulation and the pricing consequences of the regulation of the digital economy. In light of the disadvantaged position of underprivileged learners resulting from privacy regulation, it is imperative for public policymakers to consider counteractions. Firms could increase the perceived quality of their products, which is a critical success factor in the digital economy, by relinquishing advertisements