Reputation portability across online market platforms

• Applicant: Professor Dr. Timm Teubner
• Subject Area: Accounting and Finance
• Term: since 2021
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 467781052

Electronic market platforms are ubiquitous today and permeate many levels of economic life. The press and popular science literature also show great interest in well-known platforms such as eBay, Amazon, Taobao, Airbnb, Wimdu, ImmoScout, Uber, Lyft, BlaBlaCar, TaskRabbit or Helpling. Few platforms have accumulated great market power and thus created barriers to market entry for new players.An important mechanism in this context are lock-in effects, which result, among other things, from the fact that users build up a reputation on their respective platforms. Examples include numerical ratings and written customer feedback. This reputation is an essential basis for the facilitation of transactions and is considered the most important signal of trustworthiness towards other market participants. However, this reputation is usually strictly platform-bound, and cannot be transferred (and thus made use of) across platform boundaries. This is problematic both from users’ and a regulatory point of view. For example, users cannot prove their trustworthiness when moving to a new or additional platform (referred to as the cold-start problem), which hinders competition between platforms.In this sense, reputation portability refers to the idea of product/service providers using their own reputation on platform A as a signal of trustworthiness on another platform B. For example, landlords on Airbnb could use their ratings to promote their offerings on other platforms such as 9flats, Homestay.com or Wimdu. In fact, reputation portability does not yet represent a common practice (with some notable exceptions). However, there is a dynamic start-up scene with companies offering reputation aggregation services. Nevertheless, there is still little academic work dealing with reputation transfer across platform boundaries. The EU, for its part, is urging for research into the mechanisms and potential benefits of reputation portability and has taken a possibly decisive step in this direction with Article 20 of the General Data Protection Regulation.The project presented here responds to this call and addresses a relevant research gap. Today’s platform economy is on the brink of stronger linkage between platforms, some pioneer platforms already offer import functions for ratings and the EU is prescribing portability of personal user data as a matter of fact. The overarching research question of the present proposal is therefore whether, from the perspective of individual users and individual platforms, the realization of reputation portability could benefit them and – if so – how it should be done.

• DFG Programme: Research Grants