Facebook to settle video metrics fraud lawsuit

Industry Contributor 16 Jun 2019 - 3 min read

Facebook to settle video metrics fraud lawsuit

By Paul McIntyre - Executive Editor

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Tags: facebook, marketing, video ads, advertising, fraud, class action, cambridge analytica, federal trade commission

Facebook has agreed to settle a lawsuit brought by advertisers following the 2016 inflated video view scandal, where Facebook admitted it had exaggerated video metrics for two years (AdAge).

Key points

100 advertisers filed a class action at a Californian court after Facebook acknowledged it had overly inflated video view times
They alleged Facebook knew it was massively overstating average viewership metrics but misled advertisers about when it was discovered, and by how much
They alleged metrics could have been up to 900% out
They say that the false metrics led them to spend more on Facebook video ads than if they had the true numbers
The lawsuit outlines the negative impact on other media owners
The marketers were suing for on three counts: fraud; violation of California’s Unfair Competition Law and; breach of duty of care
They were also seeking orders to force Facebook into third party audits
Facebook has agreed to settle and is negotiating terms

Facebook has bigger legal issues to fry, so it probably makes sense to focus resource on the looming antitrust case being worked up by the Federal Trade Commission. News that regulators and lawmakers are dividing up big tech between them caused Facebook’s share price to dive 7% earlier this month.

But the allegations in the suit – which Facebook has stated are baseless – are serious. The filing (which you can read here) claims Facebook knew about the issue in summer 2015 but did not start telling advertisers until over a year later. Facebook booked $17.93bn in revenue in 2015 and almost $28bn in 2016 - years in which it told advertisers videos were being viewed far longer than they actually were.

Even when the miscalculation came to light, we all know what happened next. Facebook posted record revenues, just as it did following Cambridge Analytica – and just as Facebook’s shares have fully recovered their 7% slide within two weeks.

What’s ironic about the lawsuit is that even those bringing it admit in the filing that they still spend on the platform – and will continue to do so. That's testament to the platform's power. Nothing stops marketers giving Zuck their buck.