Another social media player sees trouble ahead due to Apple's new anti-tracking privacy measure
We all know by now that Apple CEO Tim Cook considers digital privacy to be important. Thus, the iPhone will soon be asking users whether they want to opt-in to be tracked by third-party apps for ads. While most expect the majority of iPhone users not to opt-in, there are some who prefer to receive these ads and consider it a convenience. Still, Facebook has said that it could lose 50% of its advertising revenue because of Apple's privacy feature. Based on its 2020 advertising revenue of approximately $85 billion, that is a pretty large sum to lose. Facebook is taking Apple to court over this and is trying to be the modern version of Paul Revere warning Americans that small businesses will be disproportionately hurt by Apple's new privacy feature.
Now, another social networking company is complaining about Apple's App Tracking Transparency system. Yesterday, Snapchat parent Snap reported its fourth quarter financial results topping expectations with a 62% increase in revenue to $911 million. For the fourth quarter, Snap's net loss improved from $241 million to $113 million worth of red ink. For all of 2020, Snap's net loss improved slightly from $1 billion to $945 million year-over-year. But Derek Anderson, the company's CFO, is concerned that Apple's new program requiring iPhone users to opt-in to be tracked for ads will hurt Snap. Anderson said, "It is not clear yet what the longer term impact of those changes may be for the top-line momentum of our business, and this may not be clear until several months or more after the changes are implemented."
Apple will soon be asking iPhone users to opt-in if they want to be tracked by third-party apps in order to receive personalized ads
Jeremi Gorman, Snap's chief business officer, says that the company has been working with Apple ahead of the change. Gorman notes that Snap has been speaking with advertisers to give them the opportunity to advertise directly through Snapchat. "The reality is we admire Apple, and we believe that they are trying to do the right thing for their customers," the executive said. "Their focus on protecting privacy is aligned with our values and the way we've built our business from the very beginning." She did add that changes to iOS are "usually disruptive and the outcome is uncertain." Snapchat now has 265 million daily active users, up 22% year-over-year.
Investors seem to be focusing more on the results announced yesterday than any possible issue that the firm might have with Apple's App Tracking Transparency feature. One hour before Friday's closing bell is scheduled to ring, Snap is trading at $63.78 up $5.46 or 9.4%.
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