I'm Deerreboza and you're listening to CNBC's Tech Check. Our show is live weekdays at 11 a.m. Eastern. Listen

in. Good Monday morning. Welcome to Tech Check. I'm Deerboza. Live from San Francisco along with Julia

Borsten from L.A. It's West Coast takeover. Today, Unity rejects app love and declining.

A $17.5 billion buyout offer. Both stocks are dropping today on the news. Tech Check, how's the exclusive? Stay right here. We'll have Unities John Rickettello later in about 30 minutes. But first, Kindred Ventures, Kanye Macabella, with us all hour. Connie, welcome. I'm so glad you could join us on a Monday morning. You're up early on the West Coast.

Hi. It's good to be here. Let's jump right into it. This kind of weird, do we call it a love triangle between Unity, Iron Source, App Levin. What do you make of it? Obviously, App Levin is the bigger company, bigger mediator, but Unity is saying no. Well, the first thing to think about is the fact that Apple has released these new privacy changes.

And that's the backdrop against which a lot of this consolidation talk is happening in the first place.

So just really quickly to ground you in what's happening, there's this new thing called the app tracking transparency,

where Apple is trying to, in the name of privacy, enable certain things to happen within Apple in terms of tracking and then other things not. And so a lot of these companies are trying to figure out how to react to that. How to monetize. And the biggest thing to think about, which we'll get to later in the show, I'm sure, is that Apple is trying to figure out whether or not they can take more of a fee of what's happening on their platform. Right. And so with respect, particularly to App Lovin and Iron Source, I think it's actually really, really important to think about ads in the context of scale and inventory. Do you have as many ads as possible, and then can you put them into a system to optimize them? And so it's clear that Unity wants more scale and more programmability with Iron Source. And so it's interesting that they decided to do that instead of App Loven because Apploven is actually the bigger network. And so I'm curious to see how they're going to be able to answer that question later. Yeah, Howard Contell, who's coming up on the show, is going to say why they are dead set on Iron Source, why their shareholders, especially when the stock was down,

what, 8% last time I checked, Unity, that is. But you explained why all of this is happening,

right? All of these Apple privacy changes. It sort of put up Levin in this position where,

uh-oh, if Unity and Iron Source come together,

what are they going to do?

And so it was kind of, it justifies the deal in the first place, but also raises the question,

what's Apple Levin going to do if it doesn't work for them?

Exactly.

And, you know, it is also important to note that Apple has a 30% cut that they take on certain activity on their platform and then a 0% cut on other activity.

And so as Apple Lovin thinks about its long-term strategy, they're going to be paying a lot of attention to which one of those pieces of revenue they're driving through their tools.

And Connie, just looking at Unity shares down 62% year-to-date, though, with all of these different factors in play, you have the challenges of navigating the Apple operating system changes. And then you also have an environment that's changing. You have fears about an ad recession and also questions about whether gaming engagement will decline as people get out and about more.

What's your big picture outlook on the potential or challenges for Unity right now?

With respect to the challenges you've named them, Julia, and it really does come down

to the fact that these platforms are all in an incredible battle with each other over real estate

and over who gets to charge rents on those real estates. And so a lot of these companies are feeling the negative externalities of that.

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