This guest post is written by Dr. Julian Runge, Visiting Scholar in the Marketing Department at Duke University’s Fuqua School of Business
Humans tend to resort to nefarious tactics when resources are scarce. When talking about online platforms and marketplaces, this behavior likely applies, too. As changes to the privacy landscape lower the efficiency of online advertising, the ad revenue pie becomes smaller (or at least does not grow as fast), increasing competitive pressure. We have seen the ripple effects of this – possibly most visibly – with the contraction of Meta’s market cap in January 2022. But beyond Meta, smaller market agents are likely to suffer even more in the longer-term. As their livelihoods are at risk, will these companies resort to nefarious tactics?
Nefarious tactics in the design and provision of online services are commonly called “Dark Patterns.” These patterns come in various shapes and forms, ranging from unnecessary informational and consent dialogues when trying to sign off online services, to friend spam where a service “asks for your email or social media permissions under the pretense it will be used for a desirable outcome (e.g. finding friends), but then spams all your contacts in a message that claims to be from you.” And these techniques are effective: The latter happened to me (and others) in 2011 on LinkedIn with sustainable effects in my real social life. Years later, professors and other remote, usually somewhat older acquaintances who had no idea what LinkedIn was, still asked me why I invited them to “this online network.” I believe this tactic has been a major accelerator of LinkedIn’s growth.
Now, given recent privacy initiatives such as Apple’s ATT, providers of online services have increased incentives to use such patterns, e.g., when trying to obtain or maintain access to users’ data. In fact, the exact wording of the ATT consent dialogue could be considered a Dark Pattern in the interest of Apple, essentially declaring everyone’s efforts to personalize ads, but their own, “tracking” – which doesn’t sound good to people and likely diminishes ATT consent opt-in rates. To understand the prevalence of such tactics in the marketplace, co-authors and I conducted an exploratory study of sign-on and -off flows with dozens of popular online services. Our paper based on this study was just published by the journal Marketing Letters (click here for open-access to the article).
Our analysis leverages natural variation in incentive alignment to see if companies actually do what’s best for consumers, as many claim, or if they put their own interests first. When users are signing on to online services, incentives are aligned: company and user both want the same. When users are signing off online services, the inverse is the case: the company wants to keep the user and their data in its realm but the user wants out. Both operations are trivial, in fact, signing off should be even more trivial as no personal data needs to be input. The idea of our observational survey then simply is: if sign-off would take longer and more clicks on average, that would suggest that companies nefariously increase the effort needed to complete sign-off flows to achieve their own agenda, disregarding consumers’ best interest in the process.
Our findings suggest that Dark Patterns are still widely used, also by companies that commonly pride themselves with a strong focus on customer experience (see Table 1 in our paper). On the positive side, some market participants seem to actually put consumers first and sign-off is substantially shorter than sign-up. There hence is precedence for good market practice and regulators should strive to set incentives for everyone to adopt these, especially as competitive pressure is likely to mount. Due to ongoing changes to privacy requirements, incentives for companies to maintain and obtain access to user data are larger than ever and we cannot really expect them to refrain from manipulative techniques to further their agendas purely out of their own volition. As we write in our paper, we believe marketing researchers and practitioners should help understand the antecedents and consequences of Dark Patterns in the marketplace and mitigate potential adverse effects for consumers. Aside from ethical considerations, in competitive marketplaces, putting the customer first has always been most profitable in the long-term!
Julian Runge is a behavioral economist and digital marketing researcher, currently serving as a Visiting Scholar at Duke University. He holds a Ph.D. in Economics and Management Science from Humboldt University Berlin and was a repeat visiting researcher at Stanford University. Prior to joining Duke, Julian worked as a researcher in Facebook’s/Meta’s marketing science R&D group. Aside from his academic pursuits, he advises companies on how to strategically use data, science, and algorithms to fuel their growth and improve their customer experiences.
Photo by Marco Bianchetti on Unsplash