'It's Only Going To Get Worse:' Apple Privacy Changes Taking Toll On Netflix, Says Palihapitiya

Zinger Key Points
  • Chamath Palihapitiya says Netflix facing both macro and micro issues
  • Impact of the privacy changes first seen in Facebook - Palihapitiya
  • Says Netflix's rivals have upped their game in content and are doing better

Netflix Inc NFLX is grappling with the impact of Apple Inc’s AAPL “broad sweeping” privacy changes, according to Social Capital owner and "SPAC King" Chamath Palihapitiya.

What Happened: Palihapitiya made his comments about the streaming giant on the “All-In" podcast, hosted by popular angel investor Jason Calacanis.

The venture capitalist said the impact of Apple’s privacy changes was first seen in the earnings of Facebook parent Meta Platforms Inc FB.

“Netflix is in some ways a little bit of a canary in the coal mine” for the shrinking effectiveness of online advertising, said Palihapitiya.

“I think it's really hard for these ads to be as effective as they used to be and it's only going to get worse,” he added, pointing to Google-parent Alphabet Inc GOOGL GOOG implementing privacy changes akin to Apple inside the Android ecosystem.

See Also: How To Buy Netflix (NFLX) Stock

Why It Matters: Mark Zuckerberg-led Meta's CFO, Dave Wehner, had said in the company’s fourth-quarter earnings call in February that Apple’s privacy changes will be a $10-billion headwind for the company.

Palihapitiya said the cost of customer acquisition “is going up,” so companies that “live and die” on it are going to be on an “expensive road.”

On Netflix, Palihapitiya said the impact of Apple’s privacy measures was a “macro” factor while the “micro thing” was people churning out of a service “when there isn’t enough value.”

“When you're spending 20 billion dollars a year on content but people more than ever are leaving the service you have to inspect how much are you really spending in these areas."

Netflix rivals Walt Disney Co’s DIS Disney+ and Apple’s streaming service were credited by Palihapitiya as having done better in the content arena.

Netflix shares plunged last week after the company reported its first subscriber loss since 2011. In the first quarter of FY 22, the company’s revenue grew 9.8% year-over-year to $7.71 billion missing the estimate of $7.93 billion growth. 

Price Action: On Friday, Netflix shares closed 1.2% lower at $215.52 in the regular session. The shares declined another 0.8% in the after-hours trading. On the same day, Apple shares closed 2.8% lower at $161.79 in the regular session, according to data from Benzinga Pro. 

Read Next: Password Sharing Woes, Ads, 'ARM,' Price Hikes And More: Key Takeaways From Netflix's Q1 Earnings Call

Photo courtesy: TechCrunch on Flickr


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