Scott Shriver: Modern websites thrive on personal data. It powers analytics, marketing and personalization. But in 2018, the European Union’s General Data Protection Regulation, or GDPR, changed the rules. Its goal?
Protect consumer privacy by limiting how firms collect and use personal data.
So what happened when privacy regulation met the digital economy?
My name is Scott Shriver, and along with my fellow researchers from Boston University and Stanford University, we examined how privacy regulation has reshaped the economics of the internet.
In this study, we asked, how did the GDPR affect online firms performance?
To answer this, we analyzed data from 1084 diverse websites using Adobe Analytics, spanning industries from retail and travel to finance and media.
Our data set included 4.4 billion page views and $750 million in weekly e-commerce revenue from EU users. Our findings indicate that the GDPR has had a substantial effect
following the enactment of the GDPR. Average website pageviews declined by approximately 12%, and e-commerce revenues experienced a comparable reduction of nearly 12%.
These estimates underscore the magnitude of the regulations impact on digital engagement and commercial performance within the European Union.
These declines occurred immediately after the GDPR enforcement deadline.
But here’s the nuance. Was this just missing data from users who refuse consent, or did real economic activity suffer?
We disentangle these effects using a bounding analysis. We estimate that between 4 and 13% of users do not consent to data processing, reducing firm
ad revenues between 0.3% and 6% due to inefficient targeting.
After accounting for these non consent rates, we estimate that the GDPR also reduced average page views in e-commerce revenue by at least 0.4%, presumably through increased website frictions and additional reductions in marketing effectiveness.
Personalized marketing channels like email and display ads were hit hardest, with traffic from these sources declining by almost 25%. We found that smaller sites suffered more than large ones, raising concerns about competition and market concentration.
So was GDPR a success? It empowered consumers with privacy choices and reduced data sharing. But it also imposed costs for companies, lower revenues, higher compliance expenses, and potential advantages for big firms. Our research shows that privacy regulation isn’t just a legal issue.
It reshapes the economics of the web.
Understanding these trade offs is critical as more regions consider adoption of GDPR style privacy laws.
