Firms increasingly leverage external data with an aim to unlock improvements in products and
services, but it is challenging to measure the value of external data. Collaborating with a large
Chinese technology company, we analyze a randomized field experiment where we manipulated
access to the market leader’s application programming interface (API) to measure the causal
impact of depersonalized external data on click-through rate (CTR) for the focal company’s
nascent search product. We report three main findings: First, compared to the baseline with
access to the market leader’s API, API removal leads to a 4.6% decrease in CTR on average for
search suggestions. Second, the negative effect due to API removal is more prevalent among
heavy users, and it is driven by both mainstream and niche content. Third, the magnitude of
this negative effect in the longer term is half as much as what we would have obtained with a
short-term experiment. We provide suggestive mechanism evidence of the longer-term effect:
the focal company’s reliance on the market leader’s data limits the development of algorithmic
system based on its internal data in the longer term. This research informs managers of whether
and how the market leader’s data affects a smaller player’s product performance. It further
sheds light on policies such as the Digital Markets Act that proposes privacy-preserving data
sharing by large digital platforms as well as a recent debate on whether big data undermines
market competition