The Economics of Data Privacy and Big Tech Regulation

Abstract

The implementation of privacy legislation in various countries is designed to protect data and privacy. However, empirical evidence substantiating the positive impacts of data privacy regulation remains scarce. This study examines the Chinese “Double Lists” policy, treated as a natural experiment, and utilizes a Difference-in-Differences (DID) methodology to assess the policy's effects on application (app) performance. The findings reveal a notable increase in app installations attributable to privacy regulation. The results suggest that privacy regulation can enhance app installations by improving user perception, particularly user perception of information security, and fostering innovation. In conclusion, privacy regulation, exemplified by the “Double Lists” policy, offers significant advantages to big firms. From a market competition perspective, privacy regulation may enhance the appeal of big tech companies to new users.

Keywords: privacy regulation, app installations, innovation, big tech, market competition