Facebook has agreed to settle a lawsuit brought against it after it overstated average viewing time for videos on the platform. The lawsuit was based on the method used by Facebook to determine viewing time for videos shared on the platform. The suit alleged that because Facebook discarded data for any views lasting three seconds or less, they were able to inflate the average watch times — by as much as 900 percent, according to the plaintiffs.
Advertisers that saw inflated metrics on videos during an 18-month period through 2015 and 2016 sued the tech giant after they claimed they overpaid for ads because of the inflated viewership numbers. Now, Facebook has agreed to settle the suit for $40 million.
Though Facebook has long claimed the lawsuit was “without merit,” they chose to settle the suit after nearly three years of litigation. Had the case continued in court, the plaintiffs could have won an estimated $100 million, meaning the out-of-court settlement nets them about 40 percent of the maximum winnings they could have received.
“Plaintiffs allege the metrics indirectly impacted billing, since (all else being equal) advertisers are likely to pay more for video ads that are being watched longer,” says the proposed settlement.
These tactics are concerning as publishers enter into relationships with Facebook to populate its News Tab. If news publishers were to experience similar inaccuracy in engagement numbers as they attempt to determine the value of their product being placed in the News Tab, news publishers would be deprived of recalibration necessary to mitigate poor performance. Transparency and trust are necessary as news publishers commit valuable content to the growth of the social media platform.
All U.S. advertisers who purchased video ads on Facebook or Facebook-owned platforms (such as Instagram) between February 12, 2015 and September 23, 2016 are eligible to receive part of the settlement. Attorneys for the class-action group have filed a motion to receive 30 percent (or $12 million) of the settlement, as well as reimbursement for approximately $730,000 in expenses, leaving around $27 million for the plaintiffs.
Reporter, Trends and Insights