An empirical investigation of privacy breach perceptions among smartphone application users

• We explore factors that affect perceptions of privacy breach among mobile app users.
• We evaluate how the type of information and legal contracts affect perceptions of a privacy breach.
• We develop and operationalize a new construct: perceived privacy breach.
• We find that not all privacy breaches are alike.
• Legal contracts only partially reduce perceptions of a privacy breach.

This study examines four factors affecting perceptions of privacy breach among smartphone application users. The four factors drawn from psychological contract theory are: the type of information perceived to be misappropriated by the application, the presence of a legal agreement giving application developers rights to use the information, the source of information suggesting that a privacy breach may have occurred and the application type (free or paid). An experimental examination of these factors indicates that perceptions of misappropriation of financial information are more distressing than perceived misappropriation of geo-location data. In addition, the existence of legal contracts giving application developers rights to information only partially attenuates perceptions of privacy breach among application users. This study offers a novel theoretical perspective toward understanding perceptions of privacy breaches and it shows that privacy breach perceptions vary according to the characteristics of the breach. At the methodological level, this study offers a new focal construct to measure perceived privacy breach. At a practical level, the empirical results highlight the limitations of legal contracts in preventing perceptions of privacy breach.