<p>Aided by digital technologies such as IoT, AI, and big data, firms are increasingly developing IoT-enabled smart green products. In addition to their functional value and green attributes, IoT-enabled smart green products can provide digital value-added services to consumers by learning consumers’ preferences from usage data. Typically, firms can enhance their digital value-added service to a greater extent when accumulating more usage data, a phenomenon called the data network effect. However, how firms leverage digital value-added services to compete against each other is still unclear. This study develops a game-theoretic model to investigate competing firms’ green design and pricing strategies while considering data network effects. Interestingly, we find that a firm without competitive advantages in functional value can outperform advantaged firms by designing a greener product and offering a high value-added service. However, firms may choose a lower greenness level even when consumers’ environmental awareness is high. Finally, we surprisingly show that firms may reduce the product price when the intensities of their data network effects increase. These findings shed light on firms’ optimal strategies for product design and pricing by highlighting the interactions among functional value, environmental value, and digital value-added services.</p>