Federal Data Privacy Law Mirroring Europe or California Would Cost U.S. Economy $122 Billion Per Year, New Report Shows

August 5, 2019

WASHINGTON—Many have called on Congress to pass a new federal data privacy law in the mold of either the European Union’s General Data Protection Regulation (GDPR) or the California Consumer Protection Act (CCPA). However, a new report from the Information Technology and Innovation Foundation (ITIF), the world’s top-ranked think tank for science and technology policy, finds that federal legislation mirroring key provisions of these laws could cost the U.S. economy approximately $122 billion per year. In contrast, a more focused but still effective national data privacy law would cost approximately $6 billion per year—around 95 percent less than an EU-style data protection law.

“Congress can significantly improve data protection at a fraction of the cost by passing data privacy legislation that focuses on a carefully targeted set of reforms,” said ITIF Senior Policy Analyst Alan McQuinn, co-author of the report. “A data protection law like Europe’s would cost each U.S. adult $483, which is more than 50 percent of what Americans spend on their electric bills each year.”

The report tallies a number of costs tied to privacy legislation including:

  • Hiring data protection officers: $6.4 billion
  • Conducting privacy audits: $440 million
  • Requiring data access, portability, deletion, and rectification: $7.2 billion
  • Allowing duplicative enforcement: $2.7 billion
  • Lowering consumer productivity: $1.9 billion

Market inefficiencies could also cost U.S. organizations roughly $104 billion, including:

  • Less access to data: $71 billion
  • Lower ad effectiveness: $33 billion

“Privacy is very important, but Congress should not pursue ‘privacy at any cost’ when there is an option for ‘privacy at a reasonable cost,’” said ITIF Vice President Daniel Castro, co-author of the report. “Overly restrictive privacy rules for the digital economy will increase prices, reduce free access to products and services, and hinder innovation in ways that harm both businesses and consumers. But doing nothing is not an option, as these costs will quickly escalate if each state creates its own set of competing and contradictory rules.”

Read the report.