Ran into the same issue with this flag set. While the player pawn seems to spawn in the same orientation, the camera is rotated (in my case it was 90 degrees counter clockwise).
You can rotate the player start entity so that the camera and pawn align, but it’s not a good fix. It looks like if you use the Auto Manage Camera flag you don’t use the pawns camera, but the camera from the controllers camera manager which has a separate rotation from the pawn. 