AppLovin got authorities interested because of data collection for advertising. Shares plummeted by 20%
The U.S. Securities and Exchange Commission (SEC) is conducting a review of AppLovin's practice of collecting users' personal data to more accurately adjust the targeting of mobile advertising. This was reported by Bloomberg sources. Neither the SEC nor AppLovin has confirmed information about the ongoing investigation. But even if proceedings are underway, it doesn't mean the SEC will impose any sanctions on the company, the agency notes. In the worst case, the audit could end with fines for the company or its officials.
According to the agency's sources, the SEC is looking into whether AppLovin violated the terms of its agreements with partner platforms to provide more aggressive ad personalization for end users. The SEC's Cybersecurity and New Technology Enforcement Division is looking into the matter.
According to sources, the SEC was responding to a whistleblower complaint filed earlier this year, as well as a series of short-seller reports published over the past year. In particular, investment firms Fuzzy Panda and Muddy Waters, both known for shorting bets, accused AppLovin of abusing its position in the advertising ecosystem: according to them, the company collected unique user IDs from other platforms without permission in order to track their behavior across different apps and sites and show them targeted ads. This practice is called "fingerprinting" and it is banned in the Apple App Store and was banned by Google's rules until February 2025.
The SEC has not yet made formal charges against AppLovin or its management, and it's unclear what stage the investigation is at, Bloomberg notes.
AppLovin declined to comment to the agency. "We regularly engage with regulators and, if we receive requests, we address them as a matter of routine," the company said in an email. - All material changes, if any, will be disclosed through appropriate public channels."
AppLovin CEO Adam Forougie wrote on the company's blog in March that the short-seller reports were "rife with inaccuracies" and rejected accusations of creating "alternative sustainable identifiers, aka fingerprints."
An SEC spokesman also did not provide comment to Bloomberg, citing that "during the government shutdown, the commission's press office cannot respond promptly to media inquiries."
AppLovin's shares plunged nearly 20% after Bloomberg's publication shortly before the close of trading on October 6, the sharpest intraday drop in six months. By the close of the session, the decline had slowed to 14%. At the extended trading on October 6, the securities continued to decline by another 4%.
AppLovin helps mobile app developers engage users and place ads within apps. The company's market capitalization has nearly doubled since the beginning of the year and last week surpassed $230 billion, approaching the value of Salesforce, which develops software for marketers. AppLovin securities were included in the S&P 500 index in September amid growing interest in artificial intelligence tools and automating advertising purchases.
This article was AI-translated and verified by a human editor
