Social media companies Snap (which runs Snapchat) and game development software company Unity have joined Facebook to warn investors that Apple’s impending ad tracking change will negatively impact their business.
As previously reported, Apple plans to use the next iOS update (iOS 1
Social media giants Facebook have told their own investors that the upcoming change to Apple’s operating system could negatively affect advertising revenue, because this type of tracking-based ad targeting is one of Facebook’s most important ingredients for success.
It has also taken out full-page newspaper ads claiming that the effect of targeted advertising will be less effective as a result of this change is that small and local businesses that rely on Facebook advertising will see higher costs to reach users, and influence these companies negatively as we will.
Unity did a similar thing, in a way. Unity operates a mobile app advertising platform that earns much of the revenue from game and app developers on platforms like iOS. The company’s management said in yesterday’s earnings call that the change will affect app and game developers’ ability to efficiently acquire new customers and optimize the lifetime value. The company predicts that revenues will fall $ 30 million in 2021 as a result of the change. However, it is estimated to be only 3 percent of the company’s total annual revenue.
Snap (which offers many sophisticated advertising products) warned investors about the effects of the change, but tried to strike a more confident tone. “We admire Apple and believe they are trying to do the right thing for customers,” said Chief Business Officer Jeremi Gorman. She said she believes Snap is well positioned to prepare advertisers for the change, even though the potential impact was acknowledged.
As a result of concerns about the Apple change, Snap shares fell 7 percent in aftermarket, despite an otherwise positive business picture, including a 22 percent increase in daily active users year over year. However, the stock rose back above its previous levels during current trading.
When the Information reported that the Facebook management consulted legal counsel for a potential lawsuit against Apple, it also said that many Facebook employees were opposed to the move because they did not see Facebook as a “convincing victim.” While Snap and Unity have not orchestrated PR or legal battles against Apple that Facebook has, the public may find Snap and Unity more sympathetic.
Snap is popular, but it does not dominate in the same way as Facebook, and it has been less involved in controversies over the spread of misinformation or privacy scandals. And Unity’s stated concern is that it will miss out on revenue because customers – game and app developers large and small – will see their own revenue fall.
Nevertheless, the companies plan to comply with Apple’s necessary changes, and these changes are expected to roll out this spring. Apple has already updated the app review guidelines to reflect the new policy.