Accused of deceiving advertisers, Facebook targeted by class action in the United States

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Millions of people and businesses, who have paid to advertise on Facebook and Instagram since August 15, 2014, have the option of suing the American giant in a class action.

© Getty — Puce Somodevilla

New week, new problems for Meta. This week, a US judge revealed that an action against Facebook’s parent company could continue in the form of a class action, the American giant being accused of having deceived advertisers. As a result, millions of people and businesses who have paid to advertise on Facebook and Instagram since August 15, 2014 have the option to sue the American giant in a class action lawsuit (“class action”).

The move follows a lawsuit filed in federal court in San Francisco in 2018. In it, several advertisers accused Facebook of inflating its advertising reach by expanding the number of people eligible to grow by up to 400% and by charging artificially high premiums for ad placements.

The people concerned also said that senior Facebook executives had been aware of these illegal practices for several years, yet they had done nothing to rectify the situation. They would even have sought to conceal these embezzlements. Problem for Facebook, in internal mails provided to the American justice last year, one of the persons in charge of the products of the Californian firm challenges his hierarchical superiors about the indicator of potential range of certain advertisements.

No reaction from management after the alert given by an employee

In the eyes of this employee, the indicator indeed seemed to inflate the potential audience to unattainable levels. Despite the concerns raised by other employees of the group, the staff of the American giant preferred to turn a deaf ear. A dangerous but particularly lucrative game for Facebook, insofar as wider advertising coverage means higher prices for advertisers to run campaigns on the social network. “These are revenues that should never have been collected because they were based on false data”, wrote the employee who gave the alert. As a reminder, Meta’s business model relies almost exclusively on advertising revenue, which amounted to $115 billion in 2021.

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Facebook’s parent company tried to oppose the complaint filed in 2018 by highlighting the excessive diversity of suspects, which it said would make it too difficult to calculate damages for the people and companies involved in the incident. approach. Arguments that were not considered admissible by Judge James Donato, who therefore decided to let the legal action take its course. By providing customers of the American giant the possibility of joining forces to cross a class action, it risks giving more scale to this affair, to the chagrin of the firm of Mark Zuckerberg, who will try to avoid a lawsuit. .

facebook one “systematically overcharged advertisers” according to Frances Haugen

However, accusations of this type are not a first for the American giant. At the end of 2021, lies about the group’s advertising performance were indeed at the heart of a complaint filed Frances Haugen, a former Facebook computer specialist specializing in algorithms, with the American stock market policeman (the SEC, for Securities and Exchange Commission). According to the whistleblower, Facebook has notably manipulated its figures by exploiting users with multiple accounts, a single user can have several accounts deemed “active” on the social network. “Facebook’s mishandling of duplicate accounts constitutes widespread fraud against its advertisers and misrepresentation to investors”, can we read in the complaint. By distorting the actual number of users, the company would have “systematically overcharged advertisers”.

Decidedly difficult period for Meta, which will not escape an antitrust lawsuit in the United States, where a complaint from the Federal Trade Commission (FTC), the American policeman of competition, was considered admissible by a federal judge. This decision paves the way for a legal battle that could shake the Californian firm, prosecuted for abuse of a dominant position and illegal monopoly. And for good reason, the FTC wants to counter Facebook to separate from Instagram and WhatsApp, two flagship applications of its galaxy. The icing on the cake, Facebook lost users for the first time in its history in the last three months of 2021. A poor performance sanctioned on Wall Street by a loss of more than 200 billion dollars in market capitalization. 2022 is going to be a long year for Mark Zuckerberg…

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