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

Information Systems Research, Forthcoming.

44 Pages Posted: 10 Jan 2023 Last revised: 5 Mar 2024

See all articles by Ziru Li

Ziru Li

Arizona State University (ASU) - Thunderbird School of Global Management

Gunwoong Lee

Korea University Business School

T. S. Raghu

Arizona State University - W. P. Carey School of Business

Zhan (Michael) Shi

Arizona State University (ASU) - W.P. Carey School of Business

Date Written: March 4, 2024

Abstract

While regional data protection and privacy regimes are often cited as major barriers to cross-border 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 dataset of apps distributed by Apple’s App Store over a 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 to native ones in the European Union (EU) 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.

Keywords: Global digital trade, GDPR, data protection and privacy regulations, digital products, mobile apps

Suggested Citation

Li, Ziru and Lee, Gunwoong and Raghu, T. S. and Shi, Zhan (Michael), Impact of the GDPR on the Global Mobile App Market: Digital Trade Implications of Data Protection and Privacy Regulations (March 4, 2024). Information Systems Research, Forthcoming., Available at SSRN: https://ssrn.com/abstract=4320436

Ziru Li (Contact Author)

Arizona State University (ASU) - Thunderbird School of Global Management ( email )

Phoenix, AZ 85004
United States

Gunwoong Lee

Korea University Business School ( email )

Anam-Dong, Seongbuk-Gu
Seoul, Seoul 02841
Korea, Republic of (South Korea)
82-2-3290-1920 (Phone)

T. S. Raghu

Arizona State University - W. P. Carey School of Business ( email )

Farmer Building 440G PO Box 872011
Tempe, AZ 85287
United States

HOME PAGE: http://https://wpcarey.asu.edu/people/profile/192381

Zhan (Michael) Shi

Arizona State University (ASU) - W.P. Carey School of Business ( email )

Tempe, AZ 85287-3706
United States

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