Facebook has agreed to pay nearly $60 million to settle a lawsuit that alleged the social media giant inflated video viewership numbers on the platform by up to 900 per cent.
The lawsuit was filed by a group of advertisers in Oakland federal court in 2016, and centres on the “duration metric” that Facebook provided for advertisers and businesses posting videos on the platform.
The $US40 million ($AU59 million) settlement is loose change for Facebook, which posted a $US22 billion profit last year on revenue of $US55.5 billion. As part of the settlement, Facebook “denies any and all claims alleged in the action and all wrongdoing whatsoever”.
The Wall Street Journal reported in 2016 that Facebook’s viewership duration metrics had been inflated by 60 to 80 per cent.
Facebook then publicly confirmed the error, saying that it had discovered it a month previously and it had then been corrected.
But in the lawsuit, the plaintiffs alleged that Facebook had been aware that it was giving faulty statistics to advertisers for much longer.
“Internal records recently provided in this litigation suggest Facebook did not discover its mistake one month before its public announcement,” they said.
“Facebook engineers knew for over a year, and multiple advertisers had reported aberrant results caused by the miscalculation. Yet Facebook did nothing to stop its dissemination of false metrics.”
The plaintiffs accused Facebook of “reckless indifference to the accuracy of its metrics” and of pursuing a “no PR” strategy to hide the fact it had “screwed up the math”.
The advertisers also claimed that the numbers were even more incorrect than initial reports suggested.
“The average viewership metrics were not inflated by only 60 to 80 per cent. They were inflated by some 150 to 900 per cent,” they said.
Facebook categorically denied these claims in the lawsuit.
“Their allegations are false,” the company said. “In fact, Facebook identified the miscalculated metrics through its own efforts, promptly addressed them, and disclosed them to its advertising clients and the public.”
In 2014 Facebook started providing more statistics to advertisers and companies posting videos on the platform, including the “duration metric”. The plaintiffs argue that this “purported to measure the average length of time consumers spent viewing the advertiser’s posted video advertisement and displayed that information to the advertisers”.
They said that Facebook “created and disseminated the new video analytics platform and its video metrics to induce users to purchase Facebook’s video advertising services”.
While Facebook’s error misled advertisers on the platform, it also had major ramifications for the media industry.
The social media giant was also boasting of the supposed rise of video, claiming that it would be “all video” within five years.
Facebook founder Mark Zuckerberg also said in 2016 that “we’re entering this new golden age of video”.
The apparent popularity of videos on Facebook, based on the incorrect statistics, led to the “pivot to video” in the media industry that took place in 2016 and 2017.
This saw many media giants, including Vox, Mic and Vice, laying off many of their text-based journalists, replacing them with video editors and producers.
But it soon became apparent that audiences did not want just video content, and many of these companies were forced to make many more pivots.
In 2018 Vox laid off 50 employees, mostly from its social video team.