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GDPR “slowing innovation” in the Android app market, research claims

National Bureau of Economic Research claims that GDPR had killed off 32.4% of apps available on the Google Play Store

The EU’s General Data Protection Regulation (GDPR) has been found to be “slowing innovation” in the Android app market.

This is according to a newly-published report by the National Bureau of Economic Research (NBER), a non-profit research organisation based in Cambridge, Massachusetts, which monitored data on 4.1 million apps at the Google Play Store between 2016 and 2019.

NBER’s research, which comes four years after GDPR was introduced in the EU, claims that the legislation had killed off just under a third (32.4%) of apps available on the Google Play Store.

It also led to diminishing the number of new Android app development, with the market entry of new apps falling by almost half (47.2%) in the months following the implementation of the data protection laws in May 2018. This has led to less innovation and greater market dominance of a few select players, the authors of the report warned.

The findings also suggest that new apps entering the Google Play Store market after the implementation of GDPR had a higher average usage, with the authors suggesting that this could be due to greater required financial investment in app development since May 2018. New apps were also less likely to deliver the same financial rewards as before GDPR, with NBER researchers claiming that developer profits could have fallen as much as 58% since its implementation. Given that Android app development has become less lucrative in the last four years, fewer developers are willing to take the risk of investing resources into an app that has a low likelihood of becoming a successful product.

The research paper authors concluded that “GDPR, whatever its beneficial impacts on privacy protection, also produced the unintended consequence of slowing innovation”.

However, they also noted that, to fully evaluate the impact of GDPR, their research would also need to measure the legislation’s effect on data protection and user privacy – areas that the paper didn’t cover.

The need for greater innovation has been cited as one of the main reasons for the UK to explore a potential overhaul of GDPR – a move that has been recently criticised by the ​​newly-appointed Information Commissioner, John Edwards.

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