Does Data Privacy Regulation Only Benefit Contracting Parties? Evidence from International Digital Product Market

Abstract

The General Data Protection Regulation (GDRP) is considered a significant step in global privacy laws. Our paper reveals counterintuitive and heterogeneous effects of GDPR on business performance in the digital products market from an international trade perspective. Based on a unique dataset, we empirically examine whether the rollout of the GDPR affects internal and external mobile app performance in European countries by using a difference-in-differences framework. We find that, in European countries, the implementation of GDPR has significantly increased the performance of mobile apps published outside the EU and decreased the performance of mobile apps published within the EU. We further conduct comprehensive robustness checks and explore the mechanisms. This paper reveals that given the more stringent privacy control instituted by GDPR, consumer privacy concerns over foreign products or services largely reduce. European citizens are more open-minded and willing to use foreign digital goods after the rollout of GDPR.