Impact of the General Data Protection Regulation on the Global Mobile App Market: Digital Trade Implications of Data Protection and Privacy Regulations

Although regional data protection and privacy regimes are often cited as major barriers to crossborder digital trade, mitigating consumer privacy concerns through regulations can potentially increase the demand for foreign digital products or services. This study presents empirical evidence on this issue by examining the impact of the General Data Protection Regulation (GDPR) on the global mobile app market. We construct a comprehensive data set of apps distributed by Apple’s App Store over the 26-month period covering the enactment of the GDPR and employ econometric models to analyze the regulation’s effects on app trade between country pairs. Contrary to assertions that regional data protection and privacy regulations impede digital trade and aggravate fragmentation, the empirical results demonstrate a significant increase in top-performing foreign apps compared with native ones in the European Union countries post-GDPR. We further conduct a series of analyses to explore the underlying mechanisms potentially driving these effects from both the supply and demand sides. Our findings lend support to the demand-side mechanism, whereby the GDPR helps alleviate consumer privacy concerns and provides reassurance in adopting foreign digital products.

History: Eric Zheng, Senior Editor; Idris Adjerid, Associate Editor.

Supplemental Material: The online appendix is available at https://doi.org/10.1287/isre.2022.0421.