Digital rms o¤er digital products to consumers and collect consumer data as a by-
product of their usage. This data acquisition generates both data-monetization revenue and
data-driven consumer benets, while imposing privacy costs on consumers. The paper ex-
plores compensation schemes for consumer data, focusing on the interdependence between
data collection and digital product provision, and examining the role of cross-subsidization
in compensation mechanisms. We analyze the optimal compensation scheme for a monop-
olistic digital rm, examine the impact of data acquisition on competition, and investigate
personalized pricing in the context of consumer privacy choices. Our ndings o¤er valuable
policy implications for digital privacy regulations and competition policies related to data
collection.