Apple CEO Tim Cook delivers a keynote during the European Union’s privacy conference at the EU Parliament in Brussels, Belgium October 24, 2018.
Yves Herman | Reuters
To target mobile ads and measure how effective they are, app developers and other industry players currently often use Apple’s (IDFA), a unique string of letters and numbers on every Apple device. But once a privacy update rolls out, app makers will be forced to ask permission to access a user’s IDFA through a prompt. A significant portion of users are expected to say no, which is expected to make targeted advertising less effective.
The changes have become a major point of contention for ad-supported companies like Facebook, which appears set to lose revenue from the change. But Facebook is far from alone.
Unity Software said in its earnings report that the changes to IDFA will affect the way mobile game developers get new customers and “how they optimize lifetime customer value.”
“Although it’s difficult to estimate, our guidance assumes IDFA changes begin in the spring and will reduce our revenue by approximately $30 million, or 3% of revenue, in 2021,” the company wrote.
In prepared remarks for its Q4 earnings report, Snap chief financial officer Derek Andersen said the Apple changes would present a risk of interruption to demand after they’re implemented.
“It is not clear yet what the longer term impact of those changes may be for the topline momentum of our business, and this may not be clear until several months or more after the changes are implemented,” he said.
Shares of both companies were down in after-hours trading on Thursday, with Snap off more than 10% and Unity down more than 15%.
Apple is currently testing the privacy update in a beta version of iOS 14, which it expects to roll out to all users in “early spring.”
Nominations are open for the 2021 CNBC Disruptor 50, a list of private start-ups using breakthrough technology to become the next generation of great public companies. Submit by Friday, Feb. 12, at 3 pm EST.