Data is non-rival: a firm’s customer data informs other firms about their customers. We uncover a network of inter-firm data conduits embedded in mobile applications. Data sharing induces comovement in firms’ operational, financial, and stock-market performances, propagates shocks (e.g., cyberattacks), and induces herding in product design. Apple’s privacy policy—a shock to inter-firm data flows—weakened these patterns. We develop a dynamic network model, where firms’ performance and growth are interconnected through a data-sharing network. A networkaugmented Gordon growth formula emerges for valuing data-generated cash flows. Our valuation metrics incorporate high-order and long-term spillovers and reveal systemically important firms.

zlynne@ceibs.edu