Privacy or Performance? The GDPR’s Impact on Online Advertising
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This thesis reviews empirical evidence on the effects of the General Data Protection Regulation (GDPR) on online advertising markets. Focusing on advertising-funded business models, it documents how the regulation altered firms’ data practices and examines how these changes affected user privacy, advertising effectiveness, and economic efficiency.
The analysis further considers the implications of these effects for market structure and competition. The literature shows that the GDPR substantially reduced user observability by limiting tracking, identifier persistence, and cross-firm data sharing. These privacy gains arise mainly through compliance-driven retrenchment and user opt-out rather than through effective user control, and they are unevenly distributed across users. At the same time, reduced access to personal data weakened advertising effectiveness. Restrictions on targeting and measurement lowered advertiser participation and revenues for many publishers, though losses were partially mitigated by substitution toward contextual targeting.
Finally, the GDPR reshaped competitive dynamics. Large platforms with strong first-party data adapted more successfully than smaller publishers and intermediaries, contributing to increased concentration and reduced entry in data-intensive markets. Overall, the findings highlight a trade-off between improved privacy protection and efficiency costs in the ad-supported digital economy.