Working Paper: NBER ID: w30028
Authors: Rebecca Janen; 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.
Keywords: No keywords provided
JEL Codes: O31; L82
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| GDPR (K24) | exit of over a third of available apps (Y60) |
| GDPR (K24) | decreased app entry rates (J68) |
| decreased app entry rates (J68) | fewer successful apps reaching significant cumulative installations (C46) |
| GDPR (K24) | increased operational costs and reduced revenue for app developers (D49) |
| increased operational costs and reduced revenue for app developers (D49) | exit of apps (Y60) |
| GDPR (K24) | apps became less intrusive (L96) |
| GDPR (K24) | average usage per app rose for vintages launched after GDPR (Y10) |
| average usage per app rose for vintages launched after GDPR (Y10) | long-run reduction in consumer surplus (D11) |
| GDPR (K24) | long-run reduction in aggregate app usage (D16) |