Europe’s Privacy Rules Are Having Unintended Consequences
Europe may succeed in redirecting innovation from data plundering into other areas. If so, that will be a good thing.
His company can weather the GDPR storm.
Photographer: John Thys/AFP/Getty Images
In the short time since it was introduced in May, Europe’s internet privacy regulations have apparently dampened venture investment in European startups. Those who have argued the General Data Protection Regulation favors big industry incumbents such as Google and Facebook will enjoy a “told you so” moment — but, all things considered, it’ll be undeserved.
In a working paper published this week, Jian Jia and Liad Wagman of the Illinois Institute of Technology and Ginger Zhe Jin of the University of Maryland show that, relative to their U.S. counterparts, European technology firms have been receiving less venture funding since the GDPR’s rollout. There’s been a 17.6 percent reduction in weekly venture deals in the EU, and the amount raised in an average deal dropped 39.6 percent. Most of the damage was to newer startups, created less than three years ago.