If an update from Angry Birds overwrote the data stored there, possibly from a bug introduced in the update, the previous data would no longer be available. That would have nothing to do with Apple's Privacy Policy.
Unfortunately this has all happened before with a previous Angry Birds Reloaded update and ironically they always use the same excuse that there is nothing they can do because of Apple's Privacy Policy. You can see a similar post here from over a year ago. The developer is responsible for how their app behaves and stores its data.
Apple Arcade Angry Bird lost progress and… - Apple Community
There are many other reports of the same thing across the different Angry Birds franchises going back several years as well. It happens and the developer takes no responsibility, which is a bit unfortunate since is is included in one of the Apple Arcade apps. You can report that problem to Apple by going to the reportaproblem.apple.com website. Apple would not be able to resolve the problem, but may want to consider the removal in Apple Arcade with users reporting the same thing and lack of developer support.
