Letting consumers decide whether to share their data may not necessarily protect their privacy. It also gives mixed results to firms. Professor Xi Li has been investigating. A Catch-22 for Consumers HKU Bulletin | Nov 2025 Cover Story 8 9 Companies collect lots of data about their customers and try to use that to their benefit. 25 years ago, Amazon was discovered to be charging existing customers higher prices than new ones. Other firms soon followed suit. Orbitz, for instance, offers cheaper hotel options to Windows users than Mac users. Uber monitors customers’ battery levels and charges them more when batteries run low, on the presumption they cannot wait for a cheaper option. Outrage over these practices prompted governments to regulate data sharing, resulting in the European Union’s General Data Protection Regulation, China’s Personal Information Protection Law and other laws. But research by Professor Xi Li, a marketing expert in the HKU Business School, suggests such regulations may not always serve the best interests of consumers. For one thing, personalised pricing as described above is not all bad. While it can harm consumers under a monopoly, it benefits them when firms compete. Regulations also do not always perform as expected. “There are hundreds of regulations about who can use Sharing versus fraud One such instance is airline tickets – consumers may want to advertise on social media that they are not wealthy and cannot afford a ticket in the hope that a cheaper one is offered to them. The expectation is that the airline will see their post and act on it accordingly, which has happened on Chinese social media, he said. Another example is sharing your fitness data with an insurer, such as step counts, which can result in a lower premium offer because you are trying to stay healthy. There is an ongoing debate in China about the fairness of customising prices, but Professor Li found that in most cases, this can be useful because it enables more customers to use a service. However, there is a caveat for firms regarding consumer fraud to skew the data. He cited the example of a ‘phone cradle’ that rocks your phone to add to your step count even while you sleep. Consumers also use VPNs to hide their location because of price discrimination between such places as the US and less economically developed countries. “Our conclusion is that firm policies and government regulations on voluntary data sharing must be approached very carefully, otherwise they can backfire,” he said. “They must also take into account this manipulative behaviour. Consumers are not passive.” consumer data and how they can use it. The policies are much more complex than we expected, and they often have unintended consequences,” he said. For instance, while regulators have tried to establish that firms only collect data when consumers give consent, these same firms can still find out personal information about their customers without such permission. “For example, a firm will know who lives with you if you share the same address with people who opt to share their data, and it will assume you are all likely to be similar. The same is true of people in your social network. And just choosing not to share data can be revealing. In many of our models, we found that rich consumers do not want to share their data because they don’t want firms to know they are rich. But firms can then infer that they are rich. So they can exploit users regardless of whether they share data voluntarily,” he said. TL;DR (too long; didn’t read) Another problem is the terms and conditions of sharing. Many consumers automatically click ‘agree’ when asked to share, without reading the fine print, which is typically onerous to read. In 2019, The New York Times looked at the privacy policies of 150 popular websites and apps and found most took 10–20 minutes each to read and required a higher-than-tertiary-level education to understand. People will encounter several such policies every day through ordinary web searches. “We have found that consumers’ reluctance to read these statements can actually be detrimental to both consumers and firms,” Professor Li said. Consumers obviously risk having their collected data misused. But firms that try to do the right thing can lose out because consumers will not read their policies. This problem could be addressed by simplifying notices to a few lines and keeping consumers on that page for a few extra seconds so they will read them. Firms could also consider offering a reward to consumers who share their data. “That could improve profits without hurting consumers,” he said. Professor Li said the complexities of data sharing suggest that governments need to consider different ways of regulating it. They could make the decision for consumers in some instances, such as not allowing data sharing under a monopoly situation, while letting consumers take control when the outcome could be beneficial to them. Indeed, there are situations when consumers want companies to know more about them. Professor Xi Li There are hundreds of regulations about who can use consumer data and how they can use it. The policies are much more complex than we expected, and they often have unintended consequences.
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