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The Impact of Privacy Laws on Online User Behavior

Author

Listed:
  • Julia Schmitt

    (Goethe University Frankfurt = Goethe-Universität Frankfurt am Main)

  • Klaus Miller

    (HEC Paris - Ecole des Hautes Etudes Commerciales)

  • Bernd Skiera

    (Goethe University Frankfurt = Goethe-Universität Frankfurt am Main)

Abstract

Policymakers worldwide draft privacy laws that require trading-off between safeguarding consumer privacy and preventing economic loss to companies that use consumer data. However, little empirical knowledge exists as to how privacy laws affect companies' performance. Accordingly, this paper empirically quantifies the effects of the enforcement of the EU's General Data Protection Regulation (GDPR) on online user behavior over time, analyzing data from 6,286 websites spanning 24 industries during the 10 months before and 18 months after the GDPR's enforcement in 2018. A panel differences estimator, with a synthetic control group approach, isolates the short- and long-term effects of the GDPR on user behavior. The results show that, on average, the GDPR's effects on user quantity and usage intensity are negative; e.g., the numbers of total visits to a website decrease by 4.9% and 10% due to GDPR in respectively the short- and long-term. These effects could translate into average revenue losses of $7 million for e-commerce websites and almost $2.5 million for ad-based websites 18 months after GDPR. The GDPR's effects vary across websites, with some industries even benefiting from it; moreover, more-popular websites suffer less, suggesting that the GDPR increased market concentration.

Suggested Citation

  • Julia Schmitt & Klaus Miller & Bernd Skiera, 2021. "The Impact of Privacy Laws on Online User Behavior," Working Papers hal-03857505, HAL.
    • Handle: RePEc:hal:wpaper:hal-03857505
    DOI: 10.2139/ssrn.3774110
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    Cited by:

    1. 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).
    2. 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.
    3. Tobias Kircher & Jens Foerderer, 2024. "Ban Targeted Advertising? An Empirical Investigation of the Consequences for App Development," Management Science, INFORMS, vol. 70(2), pages 1070-1092, February.
    4. Garrett A. Johnson & Scott K. Shriver & Samuel G. Goldberg, 2023. "Privacy and Market Concentration: Intended and Unintended Consequences of the GDPR," Management Science, INFORMS, vol. 69(10), pages 5695-5721, October.
    5. Chongwoo Choe & Noriaki Matsushima & Shiva Shekhar, 2025. "The Bright Side of the GDPR: Welfare-Improving Privacy Management," Management Science, INFORMS, vol. 71(8), pages 6836-6858, August.
    6. Vincent Lefrere & Logan Warberg & Cristobal Cheyre & Veronica Marotta & Alessandro Acquisti, 2026. "Does Privacy Regulation Harm Content Providers? A Longitudinal Analysis of the Impact of the GDPR," Management Science, INFORMS, vol. 72(3), pages 1727-1747, March.
    7. 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.

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    JEL classification:

    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

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