In a move done by one of its contributors, Snap Inc. is facing a lawsuit for allegedly exaggerating its ability to adapt to privacy updates Apple introduced earlier this year, Reuters reported.
Apple’s Application Tracking Transparency (ATT) feature, which was launched last April, allows iOS users to grant or deny permission for apps to track their activity, led some social media companies whose business models rely on this type of tracking for targeted ads, to criticize it.
The lawsuit, which was filed in the U.S. District Court for the Central District of California, accuses Snap Inc. of violating federal securities laws. The filing quotes Snap’s chief business officer, Jeremy Gorman, as saying that he had confidence in investors back in February About adapting Snap’s business model to Apple’s upcoming policy change.
Snap’s shareholders have suffered “significant losses and damages” as a result of “wrongful acts and omissions” of Snap, along with declining stock prices, according to the filing.
“Black is seeking “reimbursable damages” due to Snap’s alleged violation of federal securities laws, although the filing did not name an exact dollar amount,” it added.
Apple’s privacy update has also shocked other companies that rely on online advertising to make a profit. said VP of product marketing at Meta-owned Facebook, Graham Mudd.
“The company expects the increased headwind from platform changes, particularly the recent iOS update, to have a greater impact in the third quarter than in the second quarter,” he added.
In parallel, Facebook was involved in a full-blown PR campaign against Apple during the year 2020 and earlier this year, for trying to convince users that having more control over their data is actually a bad thing.
iOS feature has cost Snap, Facebook, Twitter, and YouTube up to $9.85 billion in lost revenue in the second half of 2021, according to Financial Times.
Snap, whose profits come largely from selling digital ads on its popular photo and video app, has taken the hardest hit, with company stock falling about 25 percent last month, one ineffective third quarter earnings report, which is attributed partly to the fallout of Apple’s privacy updates.