GDPR and its effects on the bottom line
| 15-02-2018 | treasuryXL |
On the 25th May 2018, GDPR – regulation by the European union – will come into effect. It requires any company that does business within the EU to protect the privacy relating to the data held on consumers, as well as restricting the types of data that can be collected. Obviously, this will mean extra expense for companies as they have to invest in systems and procedures to meet their obligations. However, a recent report by Deutsche Bank has shown that the implications of implementing GDPR could also have an impact on revenue.
At present, large companies like Facebook and Google collate data about their users. Mainly, this data is used to present advertising to the individual based on the analysis of the data showing where they have clicked onto etc. The scope of GDPR is very large and such large companies would not be able to deny access to their users if they decide to opt out of data use.
GDPR defines a principle of purpose limitation, This states that personal data must only be collected for specified, explicit and legitimate purposes and not furthered processed in a manner that is incompatible with those purposes. This could impact on the revenue stream of such companies.
Google receives approximately 33% of their revenue from Europe. Deutsche bank concluded that if 30% of European users opted out of data sharing, this could affect revenue by 2%. Google and Facebook receive around 75% of all online advertisement spending.
At the same time, research suggests that a quarter of a billion users of news site readers have already installed ad-blockers.
The effects on revenue for websites that actively use data supplied by the actions of their users is difficult to quantify, but it will have an impact. Companies will have to look closely at their projected revenue from online advertising and ask if the figures are too optimistic in the light of this legislation.
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