Google consolidated market share after European privacy law: paper
Google's ad revenue reached nearly $135 billion in 2019
Google market shares increased "significantly" since Europe's GDPR privacy law went into effect in May 2018, while other small and medium-sized firms have lost market share, a new paper shows.
The GDPR requires all companies that do business with EU residents to comply with strict privacy regulations, such as obtaining user consent to use cookies — a data-storage tool used on websites to remember usernames and passwords and to share information with advertisers.
"With the introduction of GDPR, the dominant firm in many markets for web technologies, Google, increases its market share whereas all other firms that supply web technology either do not see a change in market share or suffer losses," the March 8 study by the European Centre for Economic Policy Research found.
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Anna Morfey, a partner at global law firm Huasfeld, told FOX Business that small and medium-sized advertisement technology companies are being hit harder by privacy regulation than big companies like Google and Facebook.
People walk by the Google office building on Ninth Avenue in New York. (AP Photo/Mark Lennihan, File)
"Essentially, regulating privacy [means] regulating the tech companies' use of/access to data, and given the importance of data in tech markets, it's not surprising that regulating privacy/data will have a knock-on effect on competition in these markets," Morfey said.
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"Of course, market share changes probably won't be caused by one single factor — so the introduction of GDPR is unlikely to be the sole reason — but it's not surprising to me that it is considered to be a contributing factor," she added.
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Google's ad revenue reached nearly $135 billion in 2019, and it made up about 80 percent of the ad market share in 2019, according to The Wall Street Journal. In the U.K., Google made up 38.8 percent of the country's ad market share in 2019, according to market research company EMarketer. The EU has fined Google multiple times for billions of dollars for having unfair ad practices.
Researchers followed "more than 110,000 websites for 18 months to show that websites reduced their connections to web technology providers after GDPR became effective, especially regarding requests involving personal data," according to an introduction to the study.
One change the paper noted was a surge in businesses placing first-party cookies created by host domains and a decrease in third-party cookies.
An increase in first-party cookies helps Google as the world's most dominant advertising platform, while a decrease in third-party cookies hurts small ad tech companies.
Researchers also documented increases in "market concentration in web technology services after the introduction of GDPR" and found that "while most firms lose market share, the leading firm, Google, significantly increase[d] market share."
"Data exploitation tends to be perpetrated by companies [that] occupy dominant positions in the various online markets, and competition rules have a vital role to play in holding the tech giants to account," Morfey told Global Data Review.
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"It is widely acknowledged that individuals’ data is the most important asset in the digital economy, and the acquisition of vast quantities of data is what allows the likes of Google and Facebook to make billions of dollars each year via targeted advertising," Morfey added. "Effectively, data is their currency. So, it is not surprising that the study found that 'regulating privacy can have unintended consequences on market structure and competition.'"
WhoTracks.me, an online transparency tool powered by privacy-oriented web browser Cliqz, conducted a similar study just four months after GDPR went into effect in September 2018 and found similar results.
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The study blamed three factors for Google's post-GDPR dominance, including more compliance resources, use of power and influence to encouraging publishers to reduce the number of AdTech vendors, and website owners who "opt for 'safer [ad] choices', dropping smaller advertisers that may have a harder time proving compliance."