GDPR and the Importance of Data to AI Startups

27 Pages Posted: 15 Apr 2020 Last revised: 28 May 2020

See all articles by James E. Bessen

James E. Bessen

Technology & Policy Research Initiative, BU School of Law

Stephen Michael Impink

New York University (NYU) - Leonard N. Stern School of Business

Lydia Reichensperger

Technology & Policy Research Initiative, BU School of Law

Robert Seamans

New York University (NYU) - Leonard N. Stern School of Business

Date Written: April 1, 2020

Abstract

What is the impact of the European Union’s General Data Protection Regime (“GDPR”) and data regulation on AI startups? How important is data to AI product development? We study these questions using unique survey data of commercial AI startups. AI startups rely on data for their product development. Given the scale and scope of their business models, these startups are particularly susceptible to policy changes impacting data collection, storage and use. We find that training data and frequent model refreshes are particularly important for AI startups that rely on neural nets and ensemble learning algorithms. We also find that firms with customers in Europe are significantly more likely to create a new position to handle GDPR-related issues or to reallocate firm resources due to GDPR.

Keywords: artificial intelligence, automation, technology, data, data regulation, data protection, EU data protection reform

JEL Classification: O33, J21, L10

Suggested Citation

Bessen, James E. and Impink, Stephen and Reichensperger, Lydia and Seamans, Robert, GDPR and the Importance of Data to AI Startups (April 1, 2020). Available at SSRN: https://ssrn.com/abstract=3576714 or http://dx.doi.org/10.2139/ssrn.3576714

James E. Bessen (Contact Author)

Technology & Policy Research Initiative, BU School of Law ( email )

765 Commonwealth Avenue
Boston, MA 02215
United States

Stephen Impink

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

Lydia Reichensperger

Technology & Policy Research Initiative, BU School of Law ( email )

765 Commonwealth Avenue
Boston, MA 02215
United States

Robert Seamans

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

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