Data rule hanging over platform competition: How does the GDPR affect social media market concentration?

Abstract

Personal Data protection has become a cornerstone for policy in the digital sphere, significantly influencing the market behaviours of leading social media companies. This paper empirically studies the impact of the European Union’s General Data Protection Regulation (GDPR) on the social media market concentration in the EU, employing both the synthetic control method and the generalised difference-in-differences method. The findings reveal that the GDPR significantly reduced social media market concentration from 2015 to 2020, with a stronger impact on large companies. However, in the long term, the impact of the GDPR on EU social media market concentration is gradually fading, which has been very weak after 2020. Furthermore, the impact strength of the GDPR on the social media market concentration can be changed by Internet market scales and high technology levels. These insights contribute to a deeper understanding of how data protection policies shape the market dynamics of social media companies.