Facebook and Instagram advertisers filed a class-action lawsuit against Meta for $7 billion in San Francisco.
They claim that the social media giant exaggerated ad viewership figures by up to 400%, leading them to pay inflated premiums for ad placements on its platforms.
Potential Reach metric. The advertisers suing Meta allege that the Potential Reach metric used by the company to determine advertising costs relies on the total number of social media accounts rather than individual users. They argue that this approach is problematic because it could include bot and fake accounts, resulting in advertisers paying more money for their ads to be served to bots.
What Meta is saying. 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. A Meta spokesperson told AdWeek:
- “These allegations are baseless, and we will defend ourselves vigorously.”
What the advertisers are saying. Geoffrey Graber, partner at Cohen Milstein and lead counsel representing the advertisers, said:
- “We look forward to continuing to litigate this case on behalf of Meta’s advertising customers and to presenting the evidence to a jury that Meta knew about its inflated Potential Reach and refused to fix the issue due to revenue concerns.”
Why we care. The lawsuit represents millions of advertisers who may have overpaid to serve their ads on Instagram and Facebook. Should this case proceed to trial, more affected advertisers could potentially come forward to claim compensation.
Legal details. Former Meta advertisers DZ Reserve and Cain Maxwell initiated the case in 2018. Following the filing of the complaint, DZ Reserve ceased operations with Meta and it is not know if Maxwell’s business is still operational.. Fast-forward to 2024 the 9th U.S. Circuit Court of Appeals in San Francisco ruled that the company could pursue legal action against Meta for monetary damages.
Next steps. The case will either go to trial or will be resolved through a settlement involving financial compensation for the plaintiffs.
Deep dive. Read the court documents in full for more information.
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