Camera and social media company, Snap Inc. is in another litigation controversy as it is facing a lawsuit slammed against it for reportedly exaggerating its capacity to adapt to privacy updates software and hardware provider, Apple introduced earlier this year.
The Application Tracking Transparency (ATT), an Apple feature launched in April 2021, gives users the ability to control which apps are allowed to track their activity across other company’s apps and website. The feature which gives power to iOS users to either grant or deny permission to apps to track their actions was a subject of controversy as some social media companies that had their business models leveraging on this mode of tracking for targeted ads to antagonize it.
Black who filed the lawsuit at the United States District Court for the Central District of California, accused Snap Inc of contravening federal securities laws, with the filing quoting the chief business officer of Snap Inc, Jeremy Gorman positing that he has confidence Snap Inc would adapt 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.
According to Graham Mudd, the Vice-President of Facebook product marketing, the privacy update by Apple has shocked other companies that rely on online advertising to make profit.
“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,” Mudd added.
Facebook itself has last year and earlier this year been embroiled in a full-blown PR campaign against Apple for trying to convince users that having more control over their data is actually a bad thing.
According to Financial Times, the iOS new feature by Apple has cost Snap, Facebook, Twitter, and YouTube to lose up to $9.85 billion in revenue in the second half of 2021.
The major victim of this loss in revenue may have been Snap Inc, with the company stock falling about 25 percent in October 2021 in its third quarter earnings report. The major reason for the huge loss may be attributed to the fallouts coming from Apple’s privacy updates as Snap’s profit comes mainly from selling digital ads on its photo and video app.
It remains to be seen what will come out of the new lawsuit.