Data Collection and Privacy Protection on User-Generated Content Platforms: The Impact of Status Competition among Users

This paper explores how users’ desire for social distinction–reflected through status competition–affects their content creation decisions, and how these, in turn, shape the user-generated content (UGC) platform’s data strategy. Intelligence is reflected in a game-theoretic framework that captures strategic decision-making between the platform and heterogeneous users in a multi-user environment. Collaboration arises from the endogenous formation of user content contributions, where users respond strategically to both the platform’s data strategy and status competition. The results show that status competition enhances user engagement and incentivizes the platform to increase both data collection and privacy protection, highlighting a complementary relationship between these two strategies. Relative to the socially optimal strategy, the UGC platform never simultaneously under-collects users’ data and over-invests in privacy protection. To correct these distortions, we show that a two-pronged regulatory policy consisting of a minimum privacy protection investment requirement and either a liability fine or a data collection tax can align the platform’s data strategy with the social optimum. These insights contribute to both platform design and privacy regulation in multi-user environments.