Evaluating the Impact of Privacy Regulation on E-Commerce Firms: Evidence from Apple’s App Tracking Transparency

Assembling novel data sets on online advertiser spending, performance, and revenue, we quantify the economic effects of Apple’s App Tracking Transparency (ATT) privacy policy on e-commerce firms. We find that conversion-optimized Meta advertisements, affected most by ATT, saw a 37% reduction in click-through rates after ATT. Although firms responded by shifting ad spending from Meta to the Google ecosystem, firms with higher baseline Meta dependence nevertheless experienced a substantial decline in firm-wide revenue relative to firms with lower baseline Meta dependence. We quantify these effects using a variety of methods, finding revenue decreases in the range between 8% and 40% relative to less exposed firms. These declines were primarily borne by smaller e-commerce firms, raising questions about the tradeoffs between consumer privacy and the ability of smaller e-commerce and direct-to-consumer firms to succeed in the product market. This paper was accepted by Jean-Pierre Dube, marketing. Funding: This work was supported by the LEC Program on Economics & Privacy, MSI Research Grant [4001820]. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2024.06600 .