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Facebook and Instagram advertisers have filed a class action lawsuit against Meta in San Francisco for $7 billion.
They claim the social media giant has exaggerated ad viewership figures by as much as 400%, forcing them to pay high premiums for ad placements on its platforms.
Potential reach metric. The advertisers suing Meta claim that the potential reach metric the company uses to determine advertising costs depends on the total number of social media accounts, not individual users. They claim that this approach is problematic because it can involve bot and fake accounts, forcing advertisers to pay more money to serve their ads to bots.
What Meta says. Meta denied the allegations, explaining that the price advertisers are charged is based on performance metrics – not the potential reach metric as claimed in the lawsuit. This is what a Meta spokesperson said AdWeek:
- “These allegations are baseless and we will vigorously defend ourselves.”
What the advertisers say. Geoffrey Graber, partner at Cohen Milstein and principal advisor representing advertisers, said:
- “We look forward to pursuing this case on behalf of Meta’s advertising clients and presenting evidence to a jury that Meta knew of its inflated potential reach and refused to resolve the issue due to revenue concerns.”
Why we care. The lawsuit represents millions of advertisers who may have been overpaid to have their ads displayed on Instagram and Facebook. If this case goes to trial, more affected advertisers could potentially come forward to seek damages.
Legal details. Former Meta advertisers DZ Reserve and Cain Maxwell started the business in 2018. After filing the complaint, DZ Reserve ceased operations with Meta and it is unknown if Maxwell’s company is still operational. Fast forward to 2024, the 9th US Circuit Court of Appeals in San Francisco ruled that the company could take legal action against Meta for monetary damages.
Next steps. The case will go to trial or be resolved through a settlement involving financial compensation for the plaintiffs.
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Deep dive. Read the court documents complete for more information.
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