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GDPR and the Lost Generation of Innovative Apps

Author

Listed:
  • Rebecca Janßen
  • Reinhold Kesler
  • Michael E. Kummer
  • Joel Waldfogel

Abstract

Using data on 4.1 million apps at the Google Play Store from 2016 to 2019, we document that GDPR induced the exit of about a third of available apps; and in the quarters following implementation, entry of new apps fell by half. We estimate a structural model of demand and entry in the app market. Comparing long-run equilibria with and without GDPR, we find that GDPR reduces consumer surplus and aggregate app usage by about a third. Whatever the privacy benefits of GDPR, they come at substantial costs in foregone innovation.

Suggested Citation

  • Rebecca Janßen & Reinhold Kesler & Michael E. Kummer & Joel Waldfogel, 2022. "GDPR and the Lost Generation of Innovative Apps," NBER Working Papers 30028, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:30028
    Note: IO
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    Cited by:

    1. Chen, Wanyi & Wang, Yiying & Wu, Dongjing & Yin, Xingqiang, 2024. "Can the establishment of a personal data protection system promote corporate innovation?," Research Policy, Elsevier, vol. 53(9).
    2. Nils Wernerfelt & Anna Tuchman & Bradley T. Shapiro & Robert Moakler, 2025. "Estimating the Value of Offsite Tracking Data to Advertisers: Evidence from Meta," Marketing Science, INFORMS, vol. 44(2), pages 268-286, March.
    3. Fredrik Erixon & Oscar Guinea, 2024. "From Compliance to Constraint: How Digital Regulation Impacts Productivity and Innovation in Europe," EconPol Forum, CESifo, vol. 25(06), pages 18-21, November.
    4. Zhong, Chen & Feng, Nan, 2025. "Decent work in the digital era: How enterprise privacy and data rights protection enhance employee well-being," International Review of Economics & Finance, Elsevier, vol. 103(C).
    5. Guy Aridor & Yeon-Koo Che & Brett Hollenbeck & Maximilian Kaiser & Daniel McCarthy, 2024. "Evaluating the Impact of Privacy Regulation on E-Commerce Firms: Evidence from Apple’s App Tracking Transparency," CESifo Working Paper Series 10928, CESifo.
    6. Sarit Markovich & Yaron Yehezkel, 2026. "Competing for Cookies: Platforms’ Business Models in Data Markets with Network Effects," Management Science, INFORMS, vol. 72(2), pages 915-931, February.
    7. Leyden, Benjamin T., 2025. "Platform design and innovation incentives: Evidence from the product rating system on Apple's App Store," International Journal of Industrial Organization, Elsevier, vol. 99(C).
    8. Chen, Hongze & Li, Conggang & Liu, Jiatao & Xu, Rong, 2025. "Navigating digital frontiers: The impact of China's cybersecurity law on corporate digital innovation," International Review of Financial Analysis, Elsevier, vol. 103(C).
    9. Mark W. Hodgins, 2025. "The perils of cybersecurity regulation," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 38(4), pages 391-411, December.
    10. Garrett A. Johnson, 2022. "Economic Research on Privacy Regulation: Lessons from the GDPR and Beyond," NBER Chapters, in: The Economics of Privacy, pages 97-126, National Bureau of Economic Research, Inc.
    11. 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.
    12. Shuaicheng Liu, 2024. "Privacy regulation in asymmetric environments," Journal of Regulatory Economics, Springer, vol. 66(2), pages 157-173, December.
    13. Alireza Fallah & Michael I. Jordan & Ali Makhdoumi & Azarakhsh Malekian, 2024. "On Three-Layer Data Markets," Papers 2402.09697, arXiv.org, revised Nov 2025.
    14. Ziru Li & Gunwoong Lee & T. S. Raghu & Zhan (Michael) Shi, 2025. "Impact of the General Data Protection Regulation on the Global Mobile App Market: Digital Trade Implications of Data Protection and Privacy Regulations," Information Systems Research, INFORMS, vol. 36(2), pages 669-689, June.
    15. 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.
    16. repec:ces:ceswps:_10456 is not listed on IDEAS
    17. Raveesh Mayya & Siva Viswanathan, 2025. "Delaying Informed Consent: An Empirical Investigation of Mobile Apps’ Upgrade Decisions," Management Science, INFORMS, vol. 71(8), pages 7113-7135, August.
    18. 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.
    19. Ratul Das Chaudhury & Chongwoo Choe, 2023. "Digital Privacy: GDPR and Its Lessons for Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 56(2), pages 204-220, June.
    20. Masayuki Morikawa, 2023. "Compliance costs and productivity: an approach from working hours," Journal of Regulatory Economics, Springer, vol. 63(3), pages 117-137, June.

    More about this item

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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