Monday, April 25, 2022

The Impact of Privacy Regulation on Web Traffic: Evidence From the GDPR

The Impact of Privacy Regulation on Web Traffic: Evidence From the GDPR

Raffaele Congiu

Lorien Sabatino

Department of Production and Management Engineering, Politecnico di Torino

Geza Sapi

European Commission, DG Competition, Chief Economist's Team; Heinrich Heine University Dusseldorf - Duesseldorf Institute for Competition Economics (DICE)


We use traffic data from around 5,000 web domains in Europe and United States to investigate the effect of the European Union’s General Data Protection Regulation (GDPR) on website visits and user behaviour. We document an overall traffic reduction of approximately 15% in the long-run and find a measurable reduction of engagement with websites. Traffic from direct visits, organic search, email marketing, social media links, display ads, and referrals dropped significantly, but paid search traffic - mainly Google search ads - was barely affected. We observe an inverted U-shaped relationship between website size and change in visits due to privacy regulation: the smallest and largest websites lost visitors, while medium ones were less affected. Our results are consistent with the view that users care about privacy and may defer visits in response to website data handling policies. Privacy regulation can impact market structure and may increase dependence on large advertising service providers. Enforcement matters as well: The effects were amplified considerably in the long-run, following the first significant fine issued eight months after the entry into force of the GDPR.

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