February 21, 2024 at 02:32AM
Europe’s GDPR has reduced data storage and processing for European firms due to increased data management costs. The NBER paper, “Data, Privacy Laws and Firm Production: Evidence from the GDPR,” by economists Mert Demire, Diego J Jiménez Hernández, Dean Li, and Sida Peng, examines the GDPR’s impact on costs, revealing a 26% decrease in data storage and 15% decrease in data processing. Compliance costs have risen by an average of 20%, affecting data-intensive industries even more. Additionally, GDPR has increased information production costs and the paper does not address consumer benefits.
Based on the meeting notes, some key takeaways include:
– The GDPR has led European firms to decrease data storage by 26 percent and data processing by 15 percent relative to comparable US firms, making them less ‘data-intensive.’
– GDPR compliance costs range from $1.7 million for SMBs to $70 million for large organizations, with an overall average increase of 20 percent in the cost of data for EU firms.
– Compliance measures have also increased the cost to produce information by 4 percent, primarily impacting data-intensive industries like software.
The paper does not address the benefits consumers may derive from GDPR protections, and the authors have not determined whether the privacy provided by GDPR is worth the cost.