Tim Cook, Apple’s CEO, gives a keynote speech during the European Union’s data protection conference in the EU Parliament on October 24, 2018 in Brussels, Belgium.
Yves Herman | Reuters
Snap and Unity Software, which reported fourth quarter earnings after Thursday’s bell, both warned of the impending impact of Apple’s privacy changes this spring.
To target cellphone ads and measure how effective they are, app developers and other industry players are now often using the Apple Advertiser ID (IDFA), a unique sequence of letters and numbers on each Apple device. However, once a data protection update is released, app makers must ask permission to access a user’s IDFA via a command prompt. A significant proportion of users are expected to say no, which is likely to make targeted advertising less effective.
The changes have become a major controversy for ad-supported companies like Facebook, which are expected to lose revenue from the change. But Facebook is far from being alone.
Unity Software said in its earnings report that the changes to IDFA will affect the way mobile game developers acquire new customers and “how they optimize customer experience for life.”
“While difficult to predict, our predictions are that IDFA changes begin in the spring and will reduce our sales by approximately $ 30 million, or 3% of sales, in 2021,” the company wrote.
In prepared comments on its fourth quarter earnings report, Snap’s chief financial officer Derek Andersen said the Apple changes pose a risk of disrupting demand for their implementation.
“It is not yet clear what the longer-term impact these changes could have on the dynamics of our business, and it may not be clear for a few months or more after the changes are implemented,” he said.
Apple is currently testing the data protection update in a beta version of iOS 14, which is expected to be available to all users in “spring”.
Jeremi Gorman, Snap’s chief business officer, said Snap worked with Apple to prepare for the changes, trained its advertisers, and made long-term investments to use more first-party data for advertising. In addition, the company plans to give advertisers more opportunities to make their products and services available to Snap users directly through Snapchat.
“The reality is that we admire Apple and we believe that they are trying to do what is right for their customers,” she said. “Your focus on privacy is based on our values and the way we built our business from the start.”
She added, “Overall, we feel very well prepared for these changes, but changes to this ecosystem are usually disruptive and the outcome is uncertain.”
Stocks of both companies fell after close on Thursday, with Snap down more than 10% and Unity down more than 15%.
CNBC’s Salvador Rodriguez contributed to the coverage.
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