Content Platform's Redirect Advertising Strategy Under Consumer Privacy Concerns

In response to the novel feature of forced redirect ads that impose intrusiveness independently of users' data consent, a dual-platform Hotelling model is constructed to investigate content platforms' advertising strategies and the resulting market equilibrium. Two-dimensional consumer heterogeneity — in location preference and privacy concern — is introduced. Backward induction is employed to solve consumers' platform choices and data-sharing decisions. Pure-strategy Nash equilibria under four strategic combinations (advertise vs. not advertise) are analyzed, along with their welfare implications. The results show that, in the absence of privacy concerns, the market inevitably moves toward full advertising as long as ad revenue covers the risk of consumer loss. When privacy concerns are incorporated, ad revenue, personalization benefits, and platform differentiation all strengthen the incentive to advertise, whereas intrusion disutility weakens it. When neither unilateral deviation is profitable, both full advertising and no advertising emerge as Nash equilibria; platforms prefer the former for higher profits, but society may prefer the latter when intrusion disutility is severe, revealing a conflict between private rationality and social welfare. The default-on ad switch is effective only when the switching cost is lower than the difference between intrusion disutility and personalization gains — in which case all consumers turn it off and the market converges to an efficient no-ad equilibrium; otherwise, the switch is ineffectual. The study identifies a structural failure of the current consent-based regulatory framework in governing non-data-dependent intrusions, and provides theoretical guidance for regulators to refine switch design and reduce consumers' switching costs.