The Effect of Privacy Regulation on the Data Industry: Empirical Evidence from Gdpr

Data, Privacy Laws and Firm Production: Evidence from the GDPR

“…After the implementation of the GDPR, however, firms in the EU, relative to US firms, started to decrease their relative amount of data stored gradually, with cumulative effects growing steadily over the two years after the GDPR. The fact that the decrease is gradual rather than sudden may be due to the fact that it took time for firms to implement necessary changes, as noted by Aridor et al (2022) in the case of a large website.…”

“…This is particularly important in the case of websites and cookies: post-GDPR, websites that need to collect personal information must get explicit consent. As studied by Aridor et al (2022), there may also be selection in terms of which consumers OA -24 choose to opt out of data collection and how valuable the remaining data is.…”

“…While these privacy laws help harmonize and improve data collection practices, they can also be costly for firms (Johnson et al, 2022;Aridor et al, 2022;Goldberg et al, 2023;Peukert et al, 2022). For example, privacy laws may generate a wedge between the marginal product of data and its (perceived) marginal cost, leading firms to substitute data with other inputs.…”

“…These papers find that the GDPR decreased the investment in technology ventures (Jia et al, 2021) while encouraging app exit and discouraging app development (Kircher and Foerderer, 2020;Janßen et al, 2021). Several papers studying the GDPR document adverse impacts on digital tracking and advertising: the GDPR decreased the usage of tracking technology tools, such as cookies, in the immediate months after implementation (Aridor et al, 2022;Lefrere et al, 2022;Lukic et al, 2023), decreased page views and e-commerce revenue (Goldberg et al, 2023), decreased the number of website visits (Schmitt et al, 2022), increased market concentration in the advertising sector (Peukert et al, 2022;Johnson et al, 2022) and increased search frictions (Zhao et al, 2021). On the benefits side, some papers argue that GDPR requirements may have differentially filtered out low-value customers for firms, increasing the average value of remaining consumers to advertisers (Aridor et al, 2022) and increasing effective targeted advertising (Godinho de Matos and Adjerid, 2022).…”

Intermediaries in the Online Advertising Market

“…Empirical papers have studied the response by consumers, platforms and advertisers to regulation such as the GDPR (Peukert et al, 2022;Jia et al, 2021;Johnson et al, 2020). Aridor et al (2020) show that, while the GDPR induced more consumers to opt out of third party tracking, advertisers' bids for impressions on those who do not opt out increased, suggesting that platforms can profile such consumers more effectively. Rather than focusing on how privacy policy affects the ability of a platform to gather consumer information, we study how the policy affects the incentive to disclose such information to the advertisers, which the literature has ignored so far.…”