Snap has agreed to resolve claims it misled investors about privacy changes’ impact on revenue. The unusually high payout may signal heightened exposure for tech companies.
Key takeaways
- Snap investors alleged that the company misled them regarding how Apple’s then-new privacy changes would affect Snap’s ad revenue.
- According to the motion, the proposed US$65 million settlement is generous and within the range of settlements in the Ninth Circuit.
- Recent reports indicate that the tech industry is the largest target of securities class actions and AI-focused securities claims are rising.
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The plaintiffs filed a motion for preliminary approval of the class action settlement in the US District Court for the Central District of California on 27 October 2025. If approved by the court, the settlement would close a nearly four-year legal battle that began in November 2021.
Snap investors had alleged that the company had downplayed how Apple’s then-new privacy changes would impact Snap’s ad revenue. In June 2020, Apple announced that it would require apps to obtain users' consent to track them. In a February 2021 quarterly financial report, Snap said that Apple’s changes “may reduce the quantity or quality of the data and metrics that can be collected or used by us and our partners.”
However, in October 2021, Snap announced Apple’s privacy updates had a larger impact on its revenue than previously anticipated.
“Our advertising business was disrupted by changes to iOS and tracking that were broadly rolled out by Apple in June and July . . . making it more difficult for our advertising partners to measure and manage their ad campaigns for iOS,” Snap chief executive Evan Spiegel said at the time.
In response to that news, the plaintiffs alleged, Snap’s stock fell 26% from approximately US$75 to US$55 per share on 22 October 2021.
The district court dismissed the plaintiffs’ class action, but the US Court of Appeals for the Ninth Circuit revived their claims in December 2024.
Securities class action filing trends
According to the motion, the settlement avoids the risk of a smaller recovery, the potential delay and expense of continued litigation and other threats. The motion also noted the proposed US$65 million settlement “is more than six times the $10 million median settlement amount in securities class actions in the Ninth Circuit over the past decade and falls well within the range of settlements courts in this Circuit regularly approve.”
The motion cited a report released by litigation and regulatory proceedings consultancy Cornerstone Research that reviewed securities class action settlements filed in 2024. According to the report, from 2015 to 2024, 198 securities class action settlements were reached in the Ninth Circuit.
In 2024 alone, 88 securities class action settlements were filed, according to Cornerstone Research. Those 2024 settlements totalled US$3.7 billion, the median settlement amount was US$14 million and the average was US$42.4 million. By that measure, Snap’s proposed US$65 million settlement is also above average.
The tech sector is also facing many securities claims, according to insurance provider Woodruff Sawyer’s 2025 midyear assessment of securities class action filings. According to the assessment, technology companies saw the most securities class actions filed during the first half of 2025, with 35%, followed by the biotechnology sector (25%) and manufacturing (10%).
Snap’s proposed US$65 million deal would also surpass the average securities settlement obtained during the first half of 2025. In H1 2025 the average securities class action settled for US$28 million and the median settlement was US$16 million, according to Woodruff Sawyer’s findings
Woodruff Sawyer also reported that technology companies only accounted for 13% – or US$144 million – in settlements during H1 2025 compared to 67% in H1 2024. But as Snap prepares to pay a sizable settlement, there are signs that defendants are increasingly unlikely to settle.
Securities claims’ settlement and dismissal trend
According to Woodruff Sawyer’s report, 62% of securities class actions ended in dismissal or withdrawal, which exceeded a 10-year high of 60% in 2020. In contrast, 38% of securities claims were settled during the first six months of 2025, below a 10-year low of 40% in 2020.
When technology companies do settle, though, it’s often for healthy sums.
Indeed, in 2023, Zoom said it would pay US$150 million to end investors’ claims that it issued misleading statements about its cybersecurity.
Though the amount was not disclosed, Mark Zuckerberg and former Meta executives agreed to pay to end Meta shareholders’ claims that they knowingly misled users regarding Meta’s data sharing in violation of a federal order.
Some high-profile technology companies have secured dismissals in recent memory as well.
For instance, in 2022, the Delaware Court of Chancery dismissed SolarWinds investors’ claims that the company's board ignored cybersecurity issues and should be held liable for a large cyberattack discovered in 2020.
Other cases have yet to be resolved.
IT software provider CrowdStrike, for example, faces a securities class action and other legal fallout stemming from a faulty update that caused millions of computers on its corporate and government clients’ systems to crash in July 2024. More recently, Apple was also sued in June 2025 by shareholders for allegedly making materially false and misleading statements regarding AI.
Such AI-focused securities class actions may become more common. According to Cornerstone Research’s 2025 midyear report of securities class action filings, there were 12 AI-related filings in H1 2025, which is on pace to surpass the 15 total filed in 2024.
Counsel to plaintiffs
Rosen Law Firm
Partner Laurence Rosen in Los Angeles
Saxena White
Shareholder Maya Saxena in Boca Raton, Florida, and directors David Kaplan in Solana Beach, California, Lester Hooker in Boca Raton and Joshua Saltzman, Steven Singer and Kyla Grant in White Plains, New York, are assisted by Dianne Pitre, Scott Koren and Sara DiLeo
Bienert Katzman Littrell Williams
Partners John Littrell in San Clemente, California, and Michael Williams in Los Angeles
Law Offices of Frank R. Cruz
Partner Frank Cruz in Los Angeles
Counsel to Snap
Paul Weiss Rifkind Wharton and Garrison
Partners Audra Soloway, Kristina Bunting and Daniel Kramer and counsel Justin Lerer in New York are assisted by Andrew Topal
Bird Marella Rhow Lincenberg Drooks & Nessim
Partner Ekwan Rhow in Los Angeles is assisted by Darren Patrick