Snapchat Risks Apple's Wrath With Attempts At Skirting New Privacy Rules: FT

Snap Inc. SNAP is risking the wrath of Apple Inc. AAPL over exploring ways to skirt the iPhone maker’s new privacy rules that are expected to be rolled out in the coming weeks, the Financial Times reported Friday.

What Happened: Snap, the parent of messaging app Snapchat, explored ways to gather data from companies that analyze whether people have responded to ad campaigns, according to the FT report, which cited internal company documents.

Snap reportedly hoped to cross-reference the data with its own user database and then track the users, in a technique known as “probabilistic matching.”

While Snap acknowledged it had run a probabilistic matching program for several months to test the impact of Apple’s new policies, the company indicated it planned to discontinue the program after Apple introduced the changes, as per the report.

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Why It Matters: Apple’s upcoming privacy changes will give users more privacy from mobile advertising but is unpopular with app developers, many of which are small businesses. The new feature will require apps to obtain permission from users before tracking them, according to Apple.

Snap is not the only company to reportedly explore skirting Apple’s new privacy rules so as to continue tracking users without their permission. It was reported last month that Apple warned Chinese app developers and tech companies not to circumvent the new privacy rules.

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Five of China’s biggest tech companies, including Baidu Inc. BIDU, Tencent Holdings Ltd. TCEHY and ByteDance are said to be testing or implementing CAID, a system developed by the state-backed China Advertising Association, to identify and track users in the future. Other proposed workarounds reportedly use a process known as fingerprinting.

Facebook Inc. FB , the second-largest recipient of advertisement revenues after Alphabet Inc. GOOG GOOGL, had bitterly criticized Apple’s privacy rule changes for months, saying that the changes could impact targeted advertising on its platform. However, Facebook CEO Mark Zuckerberg said last month that the rule changes could benefit his company if more businesses decide to sell goods directly through Facebook and Instagram.

Price Action: Snap shares closed 4.2% higher on Thursday at $54.49, while Apple shares closed 0.7% higher at $123.00.

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