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Unlocking growth: exploring the economic impact of GDPR for tomorrow's Europe<br />

Unlocking growth: exploring the economic impact of GDPR for tomorrow's Europe

Unlocking growth: exploring the economic impact of GDPR for tomorrow's Europe

Europe stands at a pivotal moment. After years of sluggish economic growth, policymakers are exploring initiatives to simplify regulation in order to promote growth, innovation and competitiveness. This new report, by Professor Francesco Decarolis and Cristiana Firullo, investigates the economic implications of the General Data Protection Regulation (GDPR) nearly a decade after it came into force, placing it within the wider context of ongoing debates about the trade-offs between privacy, innovation and competitiveness in the European Union (EU).

The report has been sponsored by Amazon, which regularly commissions independent studies to inform broader policy discussions, and facilitated by Clifford Chance, which contributed legal background and expertise.

Economic impact of the GDPR

The report reveals a regulation that has successfully elevated formal privacy standards but at a significant and uneven economic cost. Fixed and operational compliance expenditures, particularly those related to legal interpretation, documentation and ongoing monitoring, are substantial and recurrent. Indirect effects include increased data acquisition costs, reduced cross-border data flows and a measurable slowdown in venture capital investment and innovation intensity in data-driven industries. On the user side, enhanced procedural rights have improved transparency but only partially been translated into welfare gains. There is a gap between formal protections and tangible outcomes.

In addition, the paper highlights that divergent interpretations by national Data Protection Authorities (DPAs) and differences in oversight intensity generate fragmentation and uncertainty, eroding the coherence of the single market. These findings suggest that the GDPR's aggregate impact depends as much on its governance architecture as on its substantive provisions.

Policy options

Rather than advocating for wholesale reform, the paper argues that incremental institutional improvements could restore proportionality and predictability. The paper discusses four policy options, which could foster innovation and promote growth in the EU ecosystem, while safeguarding data protection.

 

Enhance regulatory coherence and consistency

  • Ensure consistent interpretation and enforcement of the GDPR through strengthened coordination under the European Data Protection Board (EDPB). Harmonised EDPB guidance, which is evidence-based and proportionate, should prevail over national interpretations, supported by regular reviews. This approach would reduce compliance costs and provide greater predictability for cross-border firms.
  • Streamline the adoption of sectoral codes of conduct and certification mechanisms, particularly for small- and medium-sized enterprises (SMEs) and small mid-caps (SMCs). A simplified certification mechanism for businesses carrying out low-risk data processing could enable them to demonstrate GDPR compliance seamlessly as a form of "innovation safe harbour". Such a scheme could incentivise upstream controllers to rely on certified processors for accountability, thereby reducing the need for extensive due diligence and contractual safeguards in low-risk contexts. This may help alleviate disincentives for firms when engaging SME and SMC processors.

These measures may help avoid the need to reopen the GDPR for major amendments, limiting regulatory uncertainty and cost.

Promote proportionality

  • Promote proportionate, risk-based approaches within the existing regulatory framework, allowing supervisory authorities to tailor requirements to the level of risk posed by specific processing activities.
  • Regulatory sandboxes should play a constructive role in supporting AI development, training and other data-intensive use cases. These sandboxes enable data controllers to test privacy-preserving techniques under regulatory supervision, helping to reconcile innovation with compliance obligations.
  • Provide targeted guidance and support for SMEs and SMCs, ensuring they can navigate complex compliance requirements without a disproportionate burden and continue to innovate responsibly.

Clarify and rationalise data subject rights

  • Clarify and rationalise the scope of data subject rights by establishing explicit criteria and safeguards for managing repetitive or unfounded requests. Clear exemptions would prevent abuse, free up resources and enable controllers to focus on legitimate data subject demands.
  • Develop standardised assessment tools and guidance for controllers to ensure consistent application across sectors and jurisdictions. Streamlined procedures, such as aggregating similar requests or applying reasonable response timeframes, would enhance efficiency while maintaining the integrity of fundamental rights.

Simplify overlapping frameworks

  • Simplify overlapping frameworks by harmonising Data Protection Impact Assessment (DPIA) criteria and aligning the GDPR with the e-Privacy regime. Replace fragmented national lists of high-risk processing activities with a single EU-wide list maintained by the EDPB, ensuring consistency for controllers engaged in cross-border operations.
  • Aligning the GDPR and e-Privacy frameworks would reduce consent fatigue caused by repetitive consent banners and foster innovation. Allowing alternative lawful bases for non-intrusive processing, such as fraud detection or audience measurement, would protect users, support responsible data use and create a level playing field across the EU data value chain.

Such measures, the paper concludes, would preserve the GDPR's normative foundations while enhancing its economic coherence and adaptability in an evolving data economy.

About the authors

Professor Francesco Decarolis

Francesco Decarolis is a full professor of economics at Bocconi University, Milan, where he specialises in industrial organisation, competition economics, public procurement and the regulation of digital markets.

He is a CEPR research fellow and associate editor of Econometrica and the Review of Economic Studies. He has advised the European Commission, the Italian government and antitrust authorities, and has coordinated major European Research Council projects on public procurement integrity and competition in digital markets.

Cristiana Firullo

Cristiana Firullo is a PhD candidate in information science at Cornell University and an IvyPlus scholar at Stanford University’s Department of Economics. Her research focuses on behavioural and industrial organisation economics, exploring how data protection rules and personalisation algorithms affect market outcomes and consumer welfare.

She previously worked at Oxera Consulting LLP (Oxford, UK), where she specialised in antitrust and economic analysis for digital firms. Cristiana holds a BSc and MSc in economics from Bocconi University (Milan). She has research experience in economics and information systems, primarily through large-scale field experiments examining how users respond to choice architectures and online advertising environments.

The views expressed in the paper are solely those of Professor Decarolis and Cristiana Firullo and any inaccuracies or oversights are their sole responsibility. Nothing contained herein should be construed as legal advice or an endorsement by Clifford Chance LLP or Bocconi University.

While this work has received financial support from Amazon, neither Amazon nor any other stakeholder bears responsibility for its final content.

This publication does not necessarily deal with every important topic or cover every aspect of the topics with which it deals, nor is it designed to provide legal or other advice.

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