The Concentration-after-Personalisation Index (CAPI): Governing effects of personalisation using the example of targeted online advertising

Firms are increasingly personalising their offers and services, leading to an ever finer-grained segmentation of consumers online. Targeted online advertising price discrimination salient examples this development. While personalisation's overall effects on consumer welfare expectably ambiguous, it can lead concentration in the distribution commercial offers. Constellations possible which a market is generally open competition, but targeted only made aware one seller. For consumer, such could effectively resemble monopoly. We call extreme cases ‘targeting pockets’. Competition-law metrics as Herfindahl–Hirschman Index traditional means public oversight adverts would not detect concentration. We, therefore, suggest novel metric, Concentration-after-Personalisation (CAPI). The CAPI treats every separate ‘market’, computes measure for personalised each individual separately, then averages result exposure experienced by average consumer. demonstrate how serve monitoring tool regulators auditors thus help enforce existing law well proposed new regulations European Union's Digital Services Act its Artificial Intelligence Act. further show adding noise via randomly distributed non-personalised dilute potential harm overly concentrated personalisation. identify optimal degree added noise, balancing protection choice with economic interests advertisers.