A $40 million settlement has been reached in the Facebook video metrics lawsuit. The settlement would provide cash recoveries to individuals and companies that purchased video advertising on Facebook, without the need to file a claim. There is no claim form. If the settlement is granted final approval, money will be sent out automatically. You do not need to do anything.
Our attorneys initiated a class action lawsuit against Facebook in January 2017 on behalf of purchasers of video ads on Facebook. The lawsuit came on the heels of a disclosure by the Wall Street Journal that Facebook had significantly overstated its metrics for the average time spent watching videos on its platform. The lawsuit alleged that advertisers relied on Facebook’s overstated metrics, believed their ads were performing better than they actually were, and as a result, purchased more video advertising on Facebook than they otherwise would have.
Plaintiffs Amend Their Complaint to Add Allegations of Fraud
After conducting discovery and reviewing documents that Facebook produced, Plaintiffs filed an amended complaint, to add an allegation of fraud. Plaintiffs state in one of their filings that after gaining “access to Facebook’s internal records,” Plaintiffs “discovered that Facebook’s inflation of average view times was far from an honest mistake.” The filing discusses four categories of new allegations.
Earlier in the litigation, Facebook moved to dismiss Plaintiffs’ complaint on legal grounds. The court mostly denied those motions, allowing the case to proceed to discovery. It is expected that the court will consider the question of class certification sometime in 2019.
Algorithm Error Excludes Video Views Under 3 Seconds
The complaint explains that Facebook miscalculated two metrics: Average Duration of Video Viewed and Average Percentage of Video Viewed.
As the name suggests, Average Duration was supposed to show the average amount of time people spent watching the video. However, plaintiffs allege, when Facebook calculated this average it used the correct numerator (the total time spent watching the video by all users combined) but the wrong denominator (total number of users who spent any time watching the video). Facebook’s algorithm excluded video views of less than three seconds from the denominator.
The following graphics from the complaint explain the issue:
Advertisers, Facebook Understand Value of Real-Time Analytics, Lawsuit Says
The overstatement of the Average Duration metrics is important, the complaint says:
The complaint further states:
According to the complaint, Facebook knows the importance of the Average Duration metric: Facebook stated, privately, in November 2013, “Currently, we only report on video plays, which is a weakness compared to YouTube, which reports on video views, completed views, and average duration of view.”
Facebook’s overstatement of Average Duration, the complaint alleges, “provided Facebook with an unfair competitive advantage over other online video advertising platforms, such as Youtube.”
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