Privacy and Innovation: The Short-run Effects of GDPR on Consumer Engagement

Zhenqi Liu, Economics, University of Pennsylvania, and Pinar Yildirim, Marketing, The Wharton School

Abstract: In today’s connected world, individuals are no longer mere consumers of goods, information and services, but public producers of often valuable data. In fact, personal data is becoming such a core input that The Economist called it “the world’s most valuable resource” ahead of oil. Despite that, public concerns have been growing over the misuse of collecting personal data that often leads to “sensitive information being exposed, existing disparities being reinforced, and the weakening of consumer choice”.

How these concerns are addressed and respected, is the subject of a new European Union legislation—General Data Protection Regulation (GDPR)—that was enforced on May 25th, 2018. Some critics worry that GDPR could “stifle creativity, reduce the level of potential data analytics, and impact the adoption of new services”, while others embrace it as the “biggest gift”driving new marketing innovation. Indeed, how should a firm revise their marketing strategies and channel advertising resources to promote meaningful engagement in the age of GDPR?

To answer this question, we propose a two-armed project that aims to identify the impact of the rollout of GDPR on consumer engagement.