SAN FRANCISCO (CN) – Fighting off claims that it used false metrics to coax customers into buying video ads, a Facebook attorney said Monday that the social media giant never promised to give accurate data.
“Plaintiffs are seeking to add a new term to the contract – to make Facebook provide metrics and add an implied duty to provide accurate metrics,” Facebook attorney Ashok Ramani said during a hearing in San Francisco federal court.
Not only did agreements for buying video ads make no mention of providing viewership data, but the contracts also contained explicit disclaimers stating the company does “not guarantee” it “will always be safe, secure or error-free,” Ramani said.
The Facebook attorney urged U.S. District Judge Thelton Henderson to dismiss the class action filed by lead plaintiff Thomas Letizia in October 2016. Letizia says Facebook overstated the average time viewers spent watching video ads by 60 to 80 percent for two years.
Once it discovered an error that omitted views lasting less than three seconds from two sets of metrics, Facebook says it immediately disclosed the problem and corrected the bug. The error “had no impact whatsoever on billing because Facebook does not bill advertisers” based on those metrics, according to its motion to dismiss.
Nevertheless, the plaintiffs seek a judge’s order that would force Facebook to regularly audit its metrics and ensure it provides accurate data that advertisers can rely on when making purchasing decisions.
“These businesses have an interest in ensuring not only truth but also certainty,” class attorney David Stein told the judge. “They shouldn’t have to continue to wonder if metrics are accurate because Facebook doesn’t audit its metrics.”
Stein said Facebook cannot use a “broad disclaimer” to get out of making false statements. That disclaimer never specified that advertising metrics might be completely off, he said.
Ramani pushed back, saying Facebook does not take the position that the disclaimer can “shield it from all claims.”
“It’s not a ‘get out of jail free’ card,” Ramani said. “But in the context of a software error, this should apply.”
Stein and his co-counsel also attacked Facebook’s claims that it was never obligated to provide metrics to customers, calling it a self-serving argument conjured up purely for the purpose of litigation.
Facebook would like the judge to believe that its customers are “looking a gift horse in the mouth” or receiving “free steak knives” and complaining “the knives are too dull,” Stein said.
When customers signed up to purchase ads, they received emails with links to performance metrics on their videos, class co-counsel Geoffrey Graber said, adding that those emails prove Facebook offers performance metrics as one of its standard advertising services.
“Prior to this litigation, Facebook never told customers that performance metrics were a gift,” Garber said. “That position is inconsistent with their own conduct and contrary to common sense.”
Ramani countered that giving customers a link to performance data in an email does not “rise to the level of a contractual term.”
The Facebook attorney repeatedly drove home the argument that the plaintiffs failed to allege with specificity that any customers actually relied on the erroneous metrics when making purchasing decisions.
Not surprisingly, attorneys for the advertisers vehemently disputed that contention.
“Facebook induced them to spend more money on advertising,” Stein said. “Defendants said something that caused us to change our behavior. That’s the essence of reliance.”
But Ramani attempted to discredit the lawsuit by arguing that the plaintiffs lack standing to sue over Facebook’s “unfair competitive advantage” purportedly gained from putting out false data. Those claims could only cause injury to a competitor, not a consumer, he said.
But the class attorneys countered that consumers were harmed because they didn’t get the value from advertisements they expected due to the inflated viewership data.
Class attorney Robert Eglet compared it to recruiting baseball players with skewed batting average statistics.
“Imagine I’m a scout for the Giants, going to AAA teams and colleges reporting batting averages,” Eglet said. “If I decided to leave out their strike-outs, that would be wrong, and my contract would be terminated.”
Despite various attempts to poke holes in Facebook’s arguments for dismissing the lawsuit, the social media giant held strong to its convictions that it was not obligated to provide accurate data and that the plaintiffs failed to show they relied on that data when purchasing ads.
After about an hour of debate, Henderson took the arguments under advisement.
Facebook, headquartered in Menlo Park, California, boasts of 1.9 billion monthly users and is valued at $407.3 billion as of May 2017, according to Forbes. The average Facebook user generated $12.76 each in yearly advertising revenue in 2015, and that figure was expected to climb to $17.50 in 2017, according to data from the market-research website eMarketer cited in the plaintiffs’ complaint.
Ramani is with Keker Van Nest & Peters in San Francisco; David Stein is with Gibbard Gibbs in San Francisco; Graber is with Cohen Milstein Sellers & Toll in Washington D.C.; and Eglet is with Eglet Prince in Las Vegas.
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