Balancing Privacy, Innovation and Economic Growth
EU’s Internet cookie notification policy has an annual cost of €1.9 billion
WASHINGTON (November 6, 2014) The Information Technology and Innovation Foundation (ITIF) finds in a new report that the European Union’s e-Privacy Directive, which requires European websites to seek each visitor’s consent before using Internet cookies, costs European businesses and consumers approximately 1.9 billion Euros per year. This figure includes compliance costs for European website operators as well as the cost in individual and business time spent responding to the cookie notices. The authors argue that given this negative impact and the few positive benefits for privacy, the EU should abolish this largely symbolic “feel good” law for the sake of future growth of the European digital economy.
Cookies, small text files that are sent from a website and stored in a user’s web browser while they are on that website, are a basic component of the typical Internet experience, enabling targeted advertising that keeps most websites free to the public, while also providing authentication and security for users operating personal profiles. Unfortunately, despite the fact that the EU Cookie regulation has had no measureable impact on consumer privacy, numerous privacy advocates support it and similar types of regulations. However, until now there has been little direct evidence of the broad economic cost of these policies.
“By creating ‘check-the-box’ regulations that are unnecessary and costly, the EU has slowed the development of its digital economy without actually improving privacy for consumers,” says Daniel Castro, Senior Analyst with ITIF and co-author of the report. “These findings illustrate the real costs of reflexive privacy enforcement and should give policymakers around the globe pause as they attempt to balance legitimate privacy concerns with the need to promote the growth of the Internet economy.”
As European lawmakers consider revising this law, they should take into account the tradeoffs involved.
“This policy has had few upsides but lots of downsides,” adds Alan McQuinn, research assistant with ITIF and report co-author. “Its failure should be a cautionary tale for EU lawmakers considering future digital policies.”
Read the report.
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The Information Technology and Innovation Foundation (ITIF) is an independent, nonprofit, nonpartisan research and educational institute focusing on the intersection of technological innovation and public policy. Recognized by its peers in the think tank community as the global center of excellence for science and technology policy, ITIF’s mission is to formulate and promote policy solutions that accelerate innovation and boost productivity to spur growth, opportunity, and progress.