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

While regional data protection and privacy regimes are cited as a major barrier in 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. We use econometric models to study the regulation’s effects on the digital trade of apps between country pairs. Contrary to assertions that regional data protection and privacy regulations impede digital trade and aggravate fragmentation, the empirical results show a significant increase in top-performing foreign apps relative to native ones in GDPR countries after GDPR’s rollout. We further explore the underlying supply- and demand-side mechanisms that may potentially drive these effects. Our findings lend support to the demand-side mechanism that GDPR’s implementation helps alleviate consumer privacy concerns (i.e., the “trust” effect) about trying out foreign digital products