Snap faces legal action against investors after Apple’s privacy update on ad revenue

Snap Faces Investor Lawsuit After Apple's Privacy Updates Tank

Photo: Denise Charlotte (Getty Images)

Snap is facing a lawsuit from one of its shareholders for allegedly exaggerating how well it can adapt to the privacy updates Apple rolled out earlier this year. Reuters Report.

in a class action lawsuit filed in federal court This weekImmediate investor Kelly Black accused the social media company of downplaying the importance of Apple’s new privacy policy for advertising revenue. Since its launch in April, Apple Transparency of application monitoring The feature, which allows iOS users to allow or deny apps to track their activity, has angered more than a few social media companies whose business models rely on this type of tracking for targeted advertising. trust.

According to a guessThe iOS feature cost Snap, Facebook, Twitter and YouTube up to $9.85 billion in revenue loss in the second half of 2021.

Snap, whose profits come largely from the sale of digital ads on its popular photo and video app, has been the hardest hit. Company actions fall Up nearly 25% last month after an impressive third-quarter earnings report, which he attributed to a decline from Apple’s privacy updates.

for the Central District of California The lawsuit, filed in District Court, accuses Snap of violating federal securities laws. As quoted in the file, Snap’s commercial director Jeremy Gorman expressed confidence in investors. back in february On adapting Snap’s business model to Apple’s upcoming policy change.

“Overall, we feel very well prepared for these changes,” he said on the call for the results, although he also cautioned that “changes in this ecosystem are generally disruptive and the outcome is uncertain. “.

In another earnings call in July, Gorman demonstrated several new privacy-focused features for advertisers that Snap launched in preparation for Apple’s privacy updates, such as enhanced conversions, which allow conversions without identifying individual users. Uses cryptographic techniques to measure data.

Kale, the investor behind the lawsuit, claims that Gorman made several “materially false and/or misleading” statements during this call to paint a clearer picture of the effects of Apple’s new policy, when in fact the damage was already beginning to appear. The lawsuit argues that “Snap underestimated its ability to scale its advertising with Apple’s privacy changes” and “was aware of the risks of the impact of Apple’s privacy changes on business, but underestimated it”. . advertising company”.

According to the filing, Snap shareholders suffered “significant losses and damages” as a result of Snap’s “reprehensible acts and omissions” as a result of the drop in stock prices. Black is seeking “reimbursable damages” due to Snap’s alleged violation of federal securities laws, although records do not name a specific dollar amount.

Apple’s privacy update has also shocked other businesses that rely on online advertising for profit. Graham Mudd, Meta-owned Facebook Vice President of Product Marketing, said: in September The company expects “changes to the platform, including the recent iOS update, to have a bigger impact in the third quarter than in the second quarter.” Earlier, Facebook had engaged a complete PR campaign Against Apple by 2020 and earlier this year in trying to convince users that having more control over their data is actually a bad thing.

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About the Author: Tad Fisher

Prone to fits of apathy. Music specialist. Extreme food enthusiast. Amateur problem solver.

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