Impact of the EU-GDPR on Entry, Exit, and Consumer Welfare∗ Evidence from the Online Market of Mobile Applications

The enactment of the General Data Protection Regulation by the European Union has been the largest regulatory intervention in the recent history of datadriven (online) markets. We study the effect on the market of mobile smartphone applications. Specifically, we analyze how the enactment of the regulation has affected exit, entry, and consumer welfare in this market. To understand the shortrun effects of the regulation, we pursue a difference-in-differences strategy that compares differences between apps affected by the regulation to apps that operate in unaffected markets before and after the regulation. Our first results indicate that the enactment has a drastic effect on entry and exit in the app market. In a second step, we exploit the regulatory shock to quantify the value of data for consumers and app developers, and to shed light on the welfare implications of the GDPR.