$200B AppLovin faces data privacy probe after short-sellers allege misconduct: sources

Core Viewpoint - AppLovin, a rapidly growing tech company valued over $200 billion, is under scrutiny from regulators regarding its consumer data practices, including potential investigations by multiple state attorneys general and a reported SEC probe over data privacy issues [1][2][6]. Regulatory Investigations - The SEC is investigating whether AppLovin misled investors about its data collection and ad-targeting methods, following allegations from short-sellers that the company used digital "fingerprints" to improperly track users for targeted advertising [2][6]. - AppLovin is reportedly being investigated by federal and state regulators concerning its consumer data usage, with Delaware leading the probe [5][6]. - State regulators have reached out to short sellers as part of a preliminary investigation into AppLovin, indicating the seriousness of the allegations [5][6]. Allegations and Company Response - Allegations include claims that AppLovin illegally tracked children and served inappropriate ads, with a short-seller report suggesting the company assigned unique digital identifiers to underage accounts labeled "do not track" [8][14]. - AppLovin has denied these allegations, asserting that users must explicitly consent to download applications from its ads and that the product "Array" was merely a test [5][9]. - The company maintains that it operates within industry-standard policies regarding ad content and data privacy [9][12]. Business Performance - Despite the ongoing investigations and allegations, AppLovin's stock has surged 80% this year, and the company has been added to the S&P 500, indicating strong market interest in its AI-powered advertising software [12][13]. - Founded in 2012, AppLovin has shifted its focus from mobile gaming to app monetization software, positioning itself as a competitor to major players like Meta and Google [12][13]. Legislative Context - The investigations occur amid heightened legislative efforts to protect children online, including a reintroduction of an updated version of the Children’s Online Privacy Protection Act (COPPA) aimed at barring targeted ads for individuals under 17 [24][25]. - Legal challenges are also emerging against AppLovin, including a lawsuit from a California resident alleging unauthorized tracking of her data despite disabling location services [25][26].