ABSTRACT
What is the impact of the state patchwork of data privacy laws on competition? Will a federal privacy law have a pro-competitive effect?
This paper will seek to examine what impact, if any, this emerging patchwork has on competition and more particularly on smaller players’ ability to remain competitive.
To do so, the paper discusses existing economic and legal research on the impact of data privacy laws at various levels on small and mid-size players. From a qualitative perspective, this will include examining the existing literature around compliance costs and the impact of GDPR on investment in small players and the market share of large players. It will also examine potential costs associated with the burdens of increased risks and litigation on the firm’s likely behavior around regulatory arbitrage in the absence of a federal standard.
The paper concludes that a federal data privacy law could have pro-competitive effects by enabling smaller players to overcome the barriers state level fragmentation may cause. However, federal policymakers must learn lessons from the impact of GDPR to avoid privacy laws that would make it more difficult for smaller players in a variety of industries to use data in beneficial ways that allow them to compete with larger players.
Huddleston, Jennifer, The Patchwork of State Data Privacy Laws and Competition and Opportunity in Digital Markets (August 1, 2022).
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