Artificial Intelligence Innovation and Privacy Law: The Moderating Role of Culture

Abstract

With the advent of artificial intelligence (AI) centred around a logic of commercial surveillance and data capitalism, scholars are increasingly being called upon to consider the implications of privacy law. We respond by exploring the relationship between privacy law and AI innovation and how that relationship between privacy law and AI innovation varies across countries with different culture. Employing a unique dataset of AI patents, we perform a difference-in-differences analysis by exploiting the introduction of General Data Protection Regulation (GDPR). Our results show that compared with the GDPR-unaffected countries, the GDPR-affected countries exhibited a lower AI innovation rate after the GDPR introduction. Further, we find this negative effect is weaker in GDPR-affected countries that have higher levels of individualism, masculinity, and power distance, but stronger with higher levels of uncertainty avoidance. The main contribution of our study is introducing the role of privacy law and its contingencies vis à vis national culture that constitute drivers of AI innovation.