Snapchat parent company sued for downplaying iOS changes
Snap missed its earnings target because of the changes, causing shares to fall 25%.
What you need to know
- Snap is being sued by one of its own investors.
- It's over claims Snapchat's parent company misled investors and downplayed the impact of Apple's privacy changes.
- Snap missed earnings targets because of iOS 14.5's privacy changes.
Investors in Snapchat's parent company Snap is suing the outfit claiming it misled people over the impact changes to privacy in iOS 14 would have on its business.
As noted by Reuters:
Investor Kellie Black claims that Snap made statements that were "materially false and/or misleading" because "they misrepresented and failed to disclose the following adverse facts pertaining to the Company's business, operational and financial results, which were known to Defendants or recklessly disregarded by them." Specifically, the suit claims that Snap failed to disclose that Apple's changes would have, and were having an impact on the firm's ad business, and that it overstated its ability to overcome the measures, and that it "knew of, but downplayed, the risks of the impact that Apple's privacy changes had on the Company's advertising business."
The suit is a class action representing anyone who bought shares in Snap and was damaged by the claims, described to be so numerous that joining all of them in the suit would not be practical. The suit seeks damages to the plaintiff and the class.
As the suit notes, in October Snap shares fell some 25% after it emerged it was continuing to battle Apple's privacy changes and had missed its earnings target as a result. In iOS 14.5 earlier this year Apple made third-party tracking using an IDFA identifier across apps and services for the purpose of advertising an opt-in experience, with numerous surveys indicating most people are opting out. At a recent earnings call Apple CEO Tim Cook reiterated that Apple's move was overwhelmingly popular with users on iPhone 13 and its other best iPhones.