IDEAS home Printed from https://ideas.repec.org/a/eee/telpol/v45y2021i2s0308596120301737.html
   My bibliography  Save this article

The impact of the General Data Protection Regulation on internet interconnection

Author

Listed:
  • Zhuo, Ran
  • Huffaker, Bradley
  • claffy, kc
  • Greenstein, Shane

Abstract

The Internet comprises thousands of independently operated networks, interconnected using bi-laterally negotiated data exchange agreements. The European Union (EU)'s General Data Pro-tection Regulation (GDPR) imposes strict restrictions on handling of personal data of European Economic Area (EEA) residents. A close examination of the text of the law suggests signifi-cant cost to application firms. Available empirical evidence confirms reduction in data usage in the EEA relative to other markets. We investigate whether this decline in derived demand for data exchange impacts EEA networks' decisions to interconnect relative to those of non-EEA OECD networks. Our data consists of a large sample of interconnection agreements between networks globally in 2015–2019. All evidence estimates zero effects: the number of observed agreements, the inferred agreement types, and the number of observed IP-address-level inter-connection points per agreement. We also find economically small effects of the GDPR on the entry and the observed number of customers of networks. We conclude there is no visible short run effects of the GDPR on these measures at the internet layer.

Suggested Citation

  • 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).
    • Handle: RePEc:eee:telpol:v:45:y:2021:i:2:s0308596120301737
    DOI: 10.1016/j.telpol.2020.102083
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0308596120301737
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.telpol.2020.102083?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 look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. D'Ignazio, Alessio & Giovannetti, Emanuele, 2009. "Asymmetry and discrimination in Internet peering: evidence from the LINX," International Journal of Industrial Organization, Elsevier, vol. 27(3), pages 441-448, May.
    2. 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.
    3. Ken Binmore & Ariel Rubinstein & Asher Wolinsky, 1986. "The Nash Bargaining Solution in Economic Modelling," RAND Journal of Economics, The RAND Corporation, vol. 17(2), pages 176-188, Summer.
    4. Jahn, Eric & Prüfer, Jens, 2008. "Interconnection and competition among asymmetric networks in the Internet backbone market," Information Economics and Policy, Elsevier, vol. 20(3), pages 243-256, September.
    5. Avi Goldfarb & Catherine Tucker, 2011. "Online Display Advertising: Targeting and Obtrusiveness," Marketing Science, INFORMS, vol. 30(3), pages 389-404, 05-06.
    6. Avi Goldfarb & Catherine E. Tucker, 2011. "Privacy Regulation and Online Advertising," Management Science, INFORMS, vol. 57(1), pages 57-71, January.
    7. Benjamin E. Hermalin & Michael L. Katz, 2006. "Your network or mine? The economics of routing rules," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 692-719, September.
    8. Vincent Lefrere & Logan Warberg & Cristobal Cheyre & Veronica Marotta & Alessandro Acquisti, 2020. "The impact of the GDPR on content providers," Post-Print hal-03111801, HAL.
    9. Benjamin Shiller & Joel Waldfogel & Johnny Ryan, 2018. "The effect of ad blocking on website traffic and quality," RAND Journal of Economics, RAND Corporation, vol. 49(1), pages 43-63, March.
    10. Avi Goldfarb & Catherine Tucker, 2011. "Rejoinder--Implications of "Online Display Advertising: Targeting and Obtrusiveness"," Marketing Science, INFORMS, vol. 30(3), pages 413-415, 05-06.
    11. Guy Aridor & Yeon-Koo Che & Tobias Salz, 2020. "The Effect of Privacy Regulation on the Data Industry: Empirical Evidence from GDPR," NBER Working Papers 26900, National Bureau of Economic Research, Inc.
    12. Dennis Weller & Bill Woodcock, 2013. "Internet Traffic Exchange: Market Developments and Policy Challenges," OECD Digital Economy Papers 207, OECD Publishing.
    13. Jay Pil Choi & Doh-Shin Jeon & Byung-Cheol Kim, 2015. "Net Neutrality, Business Models, and Internet Interconnection," American Economic Journal: Microeconomics, American Economic Association, vol. 7(3), pages 104-141, August.
    14. Luis Aguiar & Joel Waldfogel, 2014. "Digitization, Copyright, and the Welfare Effects of Music Trade," JRC Working Papers on Digital Economy 2014-05, Joint Research Centre.
    15. Justin M. Rao & David H. Reiley, 2012. "The Economics of Spam," Journal of Economic Perspectives, American Economic Association, vol. 26(3), pages 87-110, Summer.
    16. Amalia R. Miller & Catherine E. Tucker, 2011. "Can Health Care Information Technology Save Babies?," Journal of Political Economy, University of Chicago Press, vol. 119(2), pages 289-324.
    17. Stanley Besen, 2001. "Advances in Routing Technologies and Internet Peering Agreements," American Economic Review, American Economic Association, vol. 91(2), pages 292-296, May.
    18. Susan Athey & Christian Catalini & Catherine Tucker, 2017. "The Digital Privacy Paradox: Small Money, Small Costs, Small Talk," NBER Working Papers 23488, National Bureau of Economic Research, Inc.
    19. Badasyan, Narine & Chakrabarti, Subhadip, 2008. "A simple game-theoretic analysis of peering and transit contracting among Internet service providers," Telecommunications Policy, Elsevier, vol. 32(1), pages 4-18, February.
    20. Alessandro Acquisti & Leslie K. John & George Loewenstein, 2013. "What Is Privacy Worth?," The Journal of Legal Studies, University of Chicago Press, vol. 42(2), pages 249-274.
    21. Amalia R. Miller & Catherine Tucker, 2018. "Privacy Protection, Personalized Medicine, and Genetic Testing," Management Science, INFORMS, vol. 64(10), pages 4648-4668, October.
    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. 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.
    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. Shane Greenstein, 2020. "The Basic Economics of Internet Infrastructure," Journal of Economic Perspectives, American Economic Association, vol. 34(2), pages 192-214, Spring.
    4. 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).
    5. 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.
    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. Bleier, Alexander & Goldfarb, Avi & Tucker, Catherine, 2020. "Consumer privacy and the future of data-based innovation and marketing," International Journal of Research in Marketing, Elsevier, vol. 37(3), pages 466-480.
    2. Tesary Lin, 2022. "Valuing Intrinsic and Instrumental Preferences for Privacy," Marketing Science, INFORMS, vol. 41(4), pages 663-681, July.
    3. Jin, Ginger Zhe & Wagman, Liad, 2021. "Big data at the crossroads of antitrust and consumer protection," Information Economics and Policy, Elsevier, vol. 54(C).
    4. Kelly D. Martin & Patrick E. Murphy, 2017. "The role of data privacy in marketing," Journal of the Academy of Marketing Science, Springer, vol. 45(2), pages 135-155, March.
    5. repec:nbr:nberch:14785 is not listed on IDEAS
    6. Catherine E. Tucker, 2023. "The Economics of Privacy: An Agenda," NBER Chapters, in: The Economics of Privacy, National Bureau of Economic Research, Inc.
    7. Randall Lewis & Dan Nguyen, 2015. "Display advertising’s competitive spillovers to consumer search," Quantitative Marketing and Economics (QME), Springer, vol. 13(2), pages 93-115, June.
    8. Idris Adjerid & Alessandro Acquisti & George Loewenstein, 2019. "Choice Architecture, Framing, and Cascaded Privacy Choices," Management Science, INFORMS, vol. 67(5), pages 2267-2290, May.
    9. David A. Schweidel & Yakov Bart & J. Jeffrey Inman & Andrew T. Stephen & Barak Libai & Michelle Andrews & Ana Babić Rosario & Inyoung Chae & Zoey Chen & Daniella Kupor & Chiara Longoni & Felipe Thomaz, 2022. "How consumer digital signals are reshaping the customer journey," Journal of the Academy of Marketing Science, Springer, vol. 50(6), pages 1257-1276, November.
    10. Yosuke Uno & Akira Sonoda & Masaki Bessho, 2021. "The Economics of Privacy: A Primer Especially for Policymakers," Bank of Japan Working Paper Series 21-E-11, Bank of Japan.
    11. Anna D’Annunzio & Antonio Russo, 2020. "Ad Networks and Consumer Tracking," Management Science, INFORMS, vol. 66(11), pages 5040-5058, November.
    12. 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.
    13. Imran Bashir Dar & Muhammad Bashir Khan & Abdul Zahid Khan & Bahaudin G. Mujtaba, 2021. "A qualitative analysis of the marketing analytics literature: where would ethical issues and legality rank?," Journal of Marketing Analytics, Palgrave Macmillan, vol. 9(3), pages 242-261, September.
    14. Zhou, Weihua & Pu, Yaqi & Dai, Hongyan & Jin, Qingwei, 2017. "Cooperative interconnection settlement among ISPs through NAP," European Journal of Operational Research, Elsevier, vol. 256(3), pages 991-1003.
    15. 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.
    16. Beke, Frank T. & Eggers, Felix & Verhoef, Peter C. & Wieringa, Jaap E., 2022. "Consumers’ privacy calculus: The PRICAL index development and validation," International Journal of Research in Marketing, Elsevier, vol. 39(1), pages 20-41.
    17. Daron Acemoglu & Ali Makhdoumi & Azarakhsh Malekian & Asu Ozdaglar, 2022. "Too Much Data: Prices and Inefficiencies in Data Markets," American Economic Journal: Microeconomics, American Economic Association, vol. 14(4), pages 218-256, November.
    18. Vilma Todri, 2022. "Frontiers: The Impact of Ad-Blockers on Online Consumer Behavior," Marketing Science, INFORMS, vol. 41(1), pages 7-18, January.
    19. Scott Duke Kominers & Alexander Teytelboym & Vincent P Crawford, 2017. "An invitation to market design," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 33(4), pages 541-571.
    20. Ziliang Deng & Peter W Liesch & Zeyu Wang, 2021. "Deceptive signaling on globalized digital platforms: Institutional hypnosis and firm internationalization," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(6), pages 1096-1120, August.
    21. Shunyao Yan & Klaus M. Miller & Bernd Skiera, 2020. "How Does the Adoption of Ad Blockers Affect News Consumption?," Papers 2005.06840, arXiv.org, revised Aug 2021.

    More about this item

    Keywords

    GDPR; Internet; Digital infrastructure; Networking; Interconnection;
    All these keywords.

    JEL classification:

    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • L00 - Industrial Organization - - General - - - General
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

    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:telpol:v:45:y:2021:i:2:s0308596120301737. 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/wps/find/journaldescription.cws_home/30471/description#description .

    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.