Snap is facing a lawsuit from one of its contributors for allegedly exaggerating its ability to adapt to privacy updates Apple introduced earlier this year. Reuters reports.
In a class action lawsuit filed in federal court this weekSpot investor Kellie Black has accused the social media company of downplaying Apple’s new privacy policy for ad revenue. Since its debut in April, Apple Application monitoring transparency This feature, which allows iOS users to grant or deny permission for apps to track their activity, has pissed off more than a few social media companies whose business models rely on this type of tracking for targeted ads.
according to AppreciationThe iOS Snap feature, Facebook, Twitter and YouTube cost up to $9.85 billion in lost revenue in the second half of 2021.
Snap, whose profits come largely from selling digital ads on its popular photo and video app, was among the hardest hit. company procedures landed By about 25% last month after an unimpressive third-quarter earnings report, which was partly attributed to the fallout from Apple’s privacy updates.
The lawsuit, filed in the US District Court for the Central District of California, accuses Snap of violating federal securities laws. As reported in the filing, Snap’s chief commercial officer, Jeremy Gorman, expressed confidence in investors Back in February About adapting Snap’s business model to Apple’s upcoming policy change.
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“Overall, we feel very prepared for these changes,” he said in a call for results, although he also cautioned that “changes in this ecosystem in general are disruptive and the outcome is uncertain.”
In another earnings call in July, Gorman showcased several new privacy-focused features for advertisers that Snap launched in preparation for the Apple Privacy Update, such as advanced conversions, which uses encryption technology to measure conversion data without identifying individual users.
Black, the investor behind the suit, Allegations that Gorman made several “materially false and/or misleading” statements during this call to paint a clearer picture of the effects of the new Apple policy when in reality the damage is already starting to emerge. The lawsuit argues that “Snap overestimated its ability to expand its advertising with Apple’s privacy changes” and “was aware of, but underestimated, the risks of Apple’s privacy changes impacting the business of the advertising company.”
According to the filing, Snap shareholders suffered “significant losses and damages” as a result of the drop in stock prices as well as Snap’s “errors and omissions.” Black is seeking “compensable damages recovery” for Snap’s alleged violation of federal securities laws, though the record does not say a specific dollar amount.
Apple’s privacy updates have also dealt a blow to other companies that rely on online advertising for profit. Graham Mudd, Vice President of Product Marketing for Facebook-owned Meta said: in September That the company “expected that platform changes, including recent iOS updates, will have a greater impact in the third quarter than in the second.” Previously, Facebook participated in Full PR campaign Against Apple throughout 2020 and early this year in an effort to convince users that having more control over their data is actually a bad thing.