Snap’s woes with Apple privacy changes signal what investors should expect from Facebook and Twitter

Published Thu, Oct 21 20218:13 PM EDTUpdated Thu, Oct 21 20218:20 PM EDT

Snap on Thursday finally delivered on what several tech companies have long been warning: Apple's privacy changes to the iPhone operating system would disrupt online advertising. The social media company's stock plummeted more than 20% in after-hours trading after citing Apple's changes as the reason for missing its revenue expectations. "Our advertising business was disrupted by changes to iOS ad tracking that were broadly rolled out by Apple in June and July," Snap CEO Evan Spiegel said in his prepared remarks. "While we anticipated some degree of business disruption, the new Apple-provided measurement solution did not scale as we had expected, making it more difficult for our advertising partners to measure and manage their ad campaigns for iOS." Snap's Thursday results are a sign of what to expect this quarter from tech companies that have long been warning about the impact that Apple's iOS 14.5 changes would have on their advertising businesses. This includes Facebook and Twitter , both of which are set to report their third-quarter earnings next week. The iOS 14.5 privacy changes allow iPhone and iPad users to easily prevent companies like Snap and Facebook from tracking their activity on their devices. That's bad for companies that rely on online advertising because it makes it more difficult for them to prove the effectiveness of their advertising products to their advertising clients. Apple released iOS 14.5 in April, but the specific privacy changes that impact online advertising were slowly rolled out to all users over the following months. The impact of Apple's changes were not felt by these companies during the second quarter, but as Snap's Thursday results demonstrated, the effects of iOS 14.5 are now nearly in full effect. Facebook, in particular, could be poised for poor results when it report its third-quarter earnings on Monday. No company has been louder about the negative impact of Apple's privacy changes than Facebook. The social media giant has been ringing the alarms about iOS 14.5 as far back as July 2020 , when CFO Dave Wehner warned that Apple's changes could hurt Facebook's ability to target ads. In August 2020 , the company then acknowledged that Apple's changes could lead to a more than 50% drop in Audience Network, one of its advertising businesses. The company has been so concerned about iOS 14.5 that earlier this year it rolled out a campaign, arguing that Apple's cha