The Intended and Unintended Consequences of Privacy Regulation for Consumer Marketing

May 9, 2024

Abstract

In an era where firms are innovating and using more data than ever before for marketing purposes, there is a perceived need for enhanced regulation to protect consumers’ privacy. We provide a perspective based on the academic marketing literature that evaluates the various benefits and costs of existing and pending government regulations and corporate privacy policies. We make two key points. First, regulators may want to avoid starting from the stance that data-based marketing and personalization are automatically harmful. Second, regulations and policies may have inadvertent consequences. On the demand side, privacy regulations and policies may exacerbate the digital exclusion of already marginalized segments of consumers. Further, consumers differ in whether and how they benefit from sharing versus not sharing specific data. On the supply side, regulation and policies may disproportionately disadvantage the competitiveness of entrpreneurs and small businesses. Technology platforms are proposing differential privacy solutions that mitigate some of these harms, but, again, in a way that might disadvantage small firms and entrepreneurs.