By Therese Poletti
On Thursday, Snap, Pinterest and Unity Software each said they anticipate some issues or headwinds resulting from Apple’s upcoming changes to its privacy settings, seemingly supporting Facebook’s argument that the changes will hurt app makers.
All three tech companies mentioned in their earnings calls with analysts that they expect some impact to their future financial results because of the changes Apple Inc. /zigman2/quotes/202934861/composite AAPL +1.98% will be making to privacy settings in the next version of its mobile operating system, iOS 14.
Last week, Apple Chief Executive Tim Cook spoke at a data-privacy conference , and said the changes to the so-called Identifier for Advertisers (IDFA) will be available in the next beta software release. That will give users the option of not sharing their data or having it tracked, which will make it more difficult for software developers to track users across their apps. Facebook Inc. , /zigman2/quotes/205064656/composite FB +1.00% has been decrying the proposed move ever since it was first announced last summer, but it has recently upped its rhetoric.
Last week, The Information reported that Facebook was readying a lawsuit , which it has yet to file, contending that the iPhone maker was abusing its power in the smartphone market by forcing developers to follow App Store rules that Apple itself does not have to follow.
Apple’s proposed moves are creating dark clouds over other app companies, but some are loathe to criticize the tech behemoth. On Thursday, Snapchat developer Snap Inc. /zigman2/quotes/205087158/composite SNAP -1.30% , after warning of potential uncertainty related to Apple’s plans, said it agreed with the changes.
“The reality is we admire Apple, and we believe that they are trying to do the right thing for their customers,” said Snap CEO Evan Spiegel.
Pinterest Inc. /zigman2/quotes/211319641/composite PINS -3.19% would only say that the issue was going to create “headwinds.”
“The opt-in rates from users will impact the extent of any headwinds that we see in the industry. And we’re keeping our eye on that,” said Pinterest Chief Financial Officer Todd Morgenfeld.
Unity Software Inc. /zigman2/quotes/221035391/composite U -3.91% was much more specific about the anticipated impact. The gaming-creation-platform company said in a press release that it expects the IDFA changes to reduce its annual revenue by about $30 million in 2021.
“IDFA [is] going to require that our customers recalibrate much of what they’re doing related to their acquisition or monetization and their marketing strategies,” Unity Chief Financial Officer Kim Jabal told analysts on the company’s call. “And we’ve been working really closely with customers to help them do this.”
Apple has said it is making these changes to its upcoming operating systems to protect consumers, ostensibly in an altruistic move. But it is also possibly trying to head off regulators intent on crafting stronger privacy laws.
“These new Apple requirements are just one of many changes sought by platforms and regulators in the evolving ad ecosystem that prioritizes privacy,” Colin Sebastian, an analyst with Robert Baird, wrote in a recent note. “Google could replicate many of these restrictions for Android, and cookies will be eliminated from browsers next year.”
Sebastian believes that other losers in this IDFA battle will be mobile app developers such as Snap, TikTok, LiveRamp and mobile marketing companies. He also included Zynga /zigman2/quotes/209662259/composite ZNGA -0.40% , Shopify merchants and other advertisers in his note.
The most immediate question going forward is whether Facebook will indeed go through with filing its lawsuit, which is believed to depict Apple’s behavior as anticompetitive. In the current era, where the government is finally starting to apply antitrust pressure on Big Tech, a lawsuit could force antitrust regulators into looking at Apple, if they are not already.