The United States Securities and Exchange Commission (US SEC) is reportedly investigating AppLovin, a mobile advertising technology company, concerning its data-collection practices. Sources cited in a Bloomberg report indicate that the SEC is probing allegations that AppLovin violated platform partners’ service agreements to facilitate more targeted advertising for consumers. Following these reports, AppLovin’s share price experienced a significant decline, crashing over 14 percent on October 6 and closing 14.03 percent lower at $587.00 apiece on Nasdaq, with a further 2.29 percent drop in extended trade.

The probe is reportedly being carried out by SEC enforcement officials specializing in cyber and emerging technologies. During a government shutdown, the SEC’s public affairs office was unable to respond to press inquiries. It is important to note that SEC probes do not invariably lead to enforcement actions, and companies or officials could face fines for any violations uncovered.

In response to inquiries, AppLovin declined to comment on potential regulatory matters, stating its practice of regular engagement with regulators and addressing inquiries in the ordinary course. The company affirmed that any material developments would be disclosed through appropriate public channels. However, in a blog post in March, AppLovin’s Chief Executive Officer, Adam Foroughi, countered previous short reports, labeling them as “littered with inaccuracies” and denying the creation of “alternative accurate and persistent identifiers, typically called device fingerprints.”

Furthermore, AppLovin announced in late March that it had engaged A-list litigator Alex Spiro of Quinn Emanuel Urquhart & Sullivan to conduct an “independent review and investigation into recent short report activity.” The company clarified that Spiro’s mandate was specifically to investigate the origin of the short reports and the reasons behind the publication of “clearly false reports,” confirming that this work is ongoing.

The SEC’s investigation is said to be a response to a whistleblower complaint filed earlier in the year, as well as multiple short-seller reports published over the past several months. Prior to the current SEC scrutiny, reports from Fuzzy Panda and Muddy Waters had accused AppLovin of misusing its position within the mobile advertising ecosystem. These allegations included harvesting proprietary identifiers from other platforms without authorization to track users across various websites and applications, and then retargeting them with advertisements. Such