IDEAS home Printed from https://ideas.repec.org/a/eee/iepoli/v61y2022ics0167624522000427.html
   My bibliography  Save this article

The Impact of Privacy Regulation on Web Traffic: Evidence From the GDPR

Author

Listed:
  • Congiu, Raffaele
  • Sabatino, Lorien
  • Sapi, Geza

Abstract

We use traffic data from around 5,000 web domains in Europe and United States to investigate the effect of the European Unions General Data Protection Regulation (GDPR) on website visits and user engagement. We document an overall traffic reduction of approximately 15% in the long-run and find a measurable reduction in engagement with websites. Traffic from both paid and unpaid channels dropped significantly. We observe an inverted U-shaped relationship between website size and change in visits due to privacy regulation: the smallest and largest websites lost visitors, while medium-sized ones were less affected. Enforcement matters as well: The effects were amplified considerably in the long-run, following the first significant fine issued eight months after the entry into force of the GDPR. Exploring potential mechanisms, both a reduction in advertising effectiveness and a higher user awareness of privacy issues can explain our results.

Suggested Citation

  • Congiu, Raffaele & Sabatino, Lorien & Sapi, Geza, 2022. "The Impact of Privacy Regulation on Web Traffic: Evidence From the GDPR," Information Economics and Policy, Elsevier, vol. 61(C).
    • Handle: RePEc:eee:iepoli:v:61:y:2022:i:c:s0167624522000427
    DOI: 10.1016/j.infoecopol.2022.101003
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167624522000427
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.infoecopol.2022.101003?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kretschmer, Tobias & Peukert, Christian & Bechtold, Stefan & Batikas, Michail, 2020. "European Privacy Law and Global Markets for Data," CEPR Discussion Papers 14475, C.E.P.R. Discussion Papers.
    2. Dimakopoulos, Philipp & Sudaric, Slobodan, 2018. "Privacy and Platform Competition," Rationality and Competition Discussion Paper Series 67, CRC TRR 190 Rationality and Competition.
    3. Garrett A. Johnson & Scott K. Shriver & Shaoyin Du, 2020. "Consumer Privacy Choice in Online Advertising: Who Opts Out and at What Cost to Industry?," Marketing Science, INFORMS, vol. 39(1), pages 33-51, January.
    4. B. Rajesh Kumar, 2019. "Mergers and Acquisitions by Bank of America," Management for Professionals, in: Wealth Creation in the World’s Largest Mergers and Acquisitions, chapter 30, pages 259-270, Springer.
    5. Julian Messina & Joana Silva, 2021. "Twenty Years of Wage Inequality in Latin America," The World Bank Economic Review, World Bank, vol. 35(1), pages 117-147.
    6. Avi Goldfarb & Catherine E. Tucker, 2011. "Privacy Regulation and Online Advertising," Management Science, INFORMS, vol. 57(1), pages 57-71, January.
    7. Christophe Bell'ego & David Benatia & Louis Pape, 2022. "Dealing with Logs and Zeros in Regression Models," Papers 2203.11820, arXiv.org.
    8. Sabatino, Lorien & Sapi, Geza, 2022. "Online privacy and market structure: Theory and evidence," Information Economics and Policy, Elsevier, vol. 60(C).
    9. Michal S Gal & Oshrit Aviv, 2020. "The Competitive Effects of the GDPR," Journal of Competition Law and Economics, Oxford University Press, vol. 16(3), pages 349-391.
    10. Schmitt, Julia & Miller, Klaus M. & Skiera, Bernd, 2021. "The Impact of Privacy Laws on Online User Behavior," HEC Research Papers Series 1437, HEC Paris.
    11. Alessandro Acquisti & Curtis Taylor & Liad Wagman, 2016. "The Economics of Privacy," Journal of Economic Literature, American Economic Association, vol. 54(2), pages 442-492, June.
    12. Joan Calzada & Ricard Gil, 2020. "What Do News Aggregators Do? Evidence from Google News in Spain and Germany," Marketing Science, INFORMS, vol. 39(1), pages 134-167, January.
    13. Zhuo, Ran & Huffaker, Bradley & claffy, kc & Greenstein, Shane, 2021. "The impact of the General Data Protection Regulation on internet interconnection," Telecommunications Policy, Elsevier, vol. 45(2).
    14. Shijie Lu & Xin (Shane) Wang & Neil Bendle, 2020. "Does Piracy Create Online Word of Mouth? An Empirical Analysis in the Movie Industry," Management Science, INFORMS, vol. 66(5), pages 2140-2162, May.
    15. James Campbell & Avi Goldfarb & Catherine Tucker, 2015. "Privacy Regulation and Market Structure," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 24(1), pages 47-73, March.
    16. Dimakopoulos, Philipp D. & Sudaric, Slobodan, 2018. "Privacy and platform competition," International Journal of Industrial Organization, Elsevier, vol. 61(C), pages 686-713.
    17. Ang (Chewie), Tze Chuan & Hayat, Aziz & Li, Bob, 2020. "Short-selling risk in Australia," Pacific-Basin Finance Journal, Elsevier, vol. 63(C).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Xu, Ye & Wang, Zhi-Chao & Tao, Chang-Qi, 2024. "Can innovative pilot city policies improve the allocation level of innovation factors? – Evidence from China," Technological Forecasting and Social Change, Elsevier, vol. 200(C).
    2. Chongwoo Choe & Noriaki Matsushima & Shiva Shekhar, 2023. "The Bright Side of the GDPR: Welfare-Improving Privacy Management," CESifo Working Paper Series 10617, CESifo.
    3. Nie, Fapeng & Li, Xiang & Zhou, Chang, 2024. "Impact of privacy regulation involving information collection on the ride-hailing market," Omega, Elsevier, vol. 126(C).
    4. Garrett A. Johnson, 2022. "Economic Research on Privacy Regulation: Lessons from the GDPR and Beyond," NBER Chapters, in: The Economics of Privacy, National Bureau of Economic Research, Inc.
    5. Lorien Sabatino & Geza Sapi, 2023. "Privacy regulation and online concentration during demand peaks: evidence from the E-commerce sector," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 50(2), pages 265-282, June.
    6. Carl Benedikt Frey & Giorgio Presidente, 2024. "Privacy regulation and firm performance: Estimating the GDPR effect globally," Economic Inquiry, Western Economic Association International, vol. 62(3), pages 1074-1089, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lorien Sabatino & Geza Sapi, 2023. "Privacy regulation and online concentration during demand peaks: evidence from the E-commerce sector," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 50(2), pages 265-282, June.
    2. Christian Peukert & Stefan Bechtold & Michail Batikas & Tobias Kretschmer, 2022. "Regulatory Spillovers and Data Governance: Evidence from the GDPR," Marketing Science, INFORMS, vol. 41(4), pages 746-768, July.
    3. Kesler, Reinhold & Kummer, Michael E. & Schulte, Patrick, 2019. "Competition and privacy in online markets: Evidence from the mobile app industry," ZEW Discussion Papers 19-064, ZEW - Leibniz Centre for European Economic Research.
    4. Garrett A. Johnson, 2022. "Economic Research on Privacy Regulation: Lessons from the GDPR and Beyond," NBER Chapters, in: The Economics of Privacy, National Bureau of Economic Research, Inc.
    5. Sabatino, Lorien & Sapi, Geza, 2022. "Online privacy and market structure: Theory and evidence," Information Economics and Policy, Elsevier, vol. 60(C).
    6. Yassine Lefouili & Leonardo Madio & Ying Lei Toh, 2024. "Privacy Regulation and Quality‐Enhancing Innovation," Journal of Industrial Economics, Wiley Blackwell, vol. 72(2), pages 662-684, June.
    7. Schmitt, Julia & Miller, Klaus M. & Skiera, Bernd, 2021. "The Impact of Privacy Laws on Online User Behavior," HEC Research Papers Series 1437, HEC Paris.
    8. Jin, Ginger Zhe & Wagman, Liad, 2021. "Big data at the crossroads of antitrust and consumer protection," Information Economics and Policy, Elsevier, vol. 54(C).
    9. Jian Jia & Ginger Zhe Jin & Liad Wagman, 2021. "The Short-Run Effects of the General Data Protection Regulation on Technology Venture Investment," Marketing Science, INFORMS, vol. 40(4), pages 661-684, July.
    10. Mert Demirer & Diego Jimenez-Hernandez & Dean Li & Sida Peng, 2024. "Data, Privacy Laws and Firm Production: Evidence from the GDPR," Working Paper Series WP 2024-02, Federal Reserve Bank of Chicago.
    11. Wolfgang Kerber & Karsten K. Zolna, 2021. "The German Facebook Case: The Law and Economics of the Relationship between Competition and Data Protection Law," MAGKS Papers on Economics 202114, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    12. Helia Marreiros & Mirco Tonin & Michael Vlassopoulos & M.C. Schraefel, 2016. "“Now that you mention it”: A Survey Experiment on Information, Salience and Online Privacy," BEMPS - Bozen Economics & Management Paper Series BEMPS34, Faculty of Economics and Management at the Free University of Bozen.
    13. Du, Kai & Song, Jinyuan, 2022. "The impact of geotargeting on household information acquisition: Evidence from a Google News redesign," Research Policy, Elsevier, vol. 51(10).
    14. Caleb S. Fuller, 2018. "Privacy law as price control," European Journal of Law and Economics, Springer, vol. 45(2), pages 225-250, April.
    15. Anna D’Annunzio & Antonio Russo, 2020. "Ad Networks and Consumer Tracking," Management Science, INFORMS, vol. 66(11), pages 5040-5058, November.
    16. Anna D’Annunzio & Antonio Russo, 2024. "Intermediaries in the Online Advertising Market," Marketing Science, INFORMS, vol. 43(1), pages 33-53, January.
    17. Morlok, Tina & Matt, Christian & Hess, Thomas, 2017. "Privatheitsforschung in den Wirtschaftswissenschaften: Entwicklung, Stand und Perspektiven," Working Papers 1/2017, University of Munich, Munich School of Management, Institute for Information Systems and New Media.
    18. Michael Kummer & Patrick Schulte, 2019. "When Private Information Settles the Bill: Money and Privacy in Google’s Market for Smartphone Applications," Management Science, INFORMS, vol. 65(8), pages 3470-3494, August.
    19. Catherine E. Tucker, 2023. "The Economics of Privacy: An Agenda," NBER Chapters, in: The Economics of Privacy, National Bureau of Economic Research, Inc.
    20. Yassine Lefouili & Leonardo Madio & Ying Lei Toh, 2024. "Privacy regulation and quality-enhancing innovation," Post-Print hal-04774302, HAL.

    More about this item

    Keywords

    Privacy regulation; GDPR; Web traffic; Marketing channels; Firm size;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L5 - Industrial Organization - - Regulation and Industrial Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:iepoli:v:61:y:2022:i:c:s0167624522000427. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505549 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.