GDPR hit small Ad companies harder than the tech giants like Google or Facebook

A new study finds that the European Union’s effort to give individuals more control of their personal data has decreased the amount of consumer information tracked online. But the remaining data might be even more valuable to companies marketing to customers.

In the two years since the General Data Protection Regulation went into effect, there was a 10.7% rate of users opting out of sharing their data under the directive’s features, however, the trackability of remaining users increased by about 8%, according to MIT assistant professor of economics Tobias Salz.

“GDPR has changed the composition of users,” said Salz in an interview. “Our results indicate that those users who remain are on average of higher value to advertisers.”

The working paper, “The Effect of Privacy Regulation on the Data Industry: Empirical Evidence from GDPR,” was written by Salz and his co-researchers Guy Aridor and Yeon-Koo Che, both of Columbia University. The researchers studied an anonymous third-party advertising company that recorded keyword searches, and purchases, for online travel agencies. The dataset was collected for searches and purchases between Jan. 1 – July 31, 2018. GDPR went into effect in May of 2018.

Under the directive, a person living in one of the EU countries has the right to know how their data is collected, processed, and protected by a company, as well as the right to request that that information be erased if it is no longer needed. GDPR applies to companies based in the EU, and companies outside the EU that offer goods, services, or “monitor the behavior” (such as social media) of people living in one of the EU member countries.

“What this means for these third-party providers is of course less traffic and as a result less business,” Salz said. “And we do find an overall reduction in revenues.”

However, he added, “we find that some of these losses are actually being offset. That to us was indeed surprising.”

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