Facebook executives allegedly knew about misleading metric ‘for years’

New court documents claim that company was aware about key ad metric exaggerating marketing reach

FILE - In this Jan. 17, 2017, file photo, Chief Operating Officer of Facebook, Sheryl Sandberg, delivers a speech during the visit of a start-up companies gathering at Paris' Station F in Paris. For the past decade, Sheryl Sandberg has been the poised, reliable second-in-command to Facebook CEO Mark Zuckerberg, helping steer Facebook’s rapid growth around the world, while also cultivating her brand in ways that hint at aspirations well beyond the social network. (AP Photo/Thibault Camus, File) (AP)

According to court documents, Facebook executives allegedly "knew for years" that a "key advertising metric was exaggerating how many users might see commercials on its site". However, they "failed to disclose or fix the problem", according to filings from a class-action lawsuit filed against the company.

The lawsuit was filed in Northern California in 2018 by a small-business owner. New court documents from the lawsuit claim that Facebook personnel knew that "its so-called potential reach metric" that is used to inform advertisers of their potential audience size was "inflated and misleading".

These documents go on to name chief operating officer Sheryl Sandberg and David Wehner, who is Facebook's financial officer, "in the context of internal communications in which they were involved in 2017".

Sandberg's and Wehner's remarks and actions "have largely been redacted from the documents, however, on the grounds that they are commercially sensitive for Facebook".

The lawsuit claims that "Facebook represents the potential reach metric as a measure of how many people a given marketer could reach with an advertisement". However, what it actually indicates is the total number of accounts that the marketer could reach — "a figure that could include fake and duplicated accounts", according to the allegations.

"In some cases, the number cited for potential audience size in certain US states and demographics was actually larger than the population size as recorded in census figures," new documents claim.

"Facebook's failure to remove duplicate and fake accounts from its potential reach metric makes the metric fundamentally misleading," the complaint said.

Facebook, as of March 3, has "still has not removed the fake and duplicate accounts from its potential reach calculation", the documents claim.

Facebook's own estimates in their financial filings suggest that "duplicate accounts represented approximately 11% of its 2.5bn monthly active user count for the fourth quarter of 2019, while fake ones accounted for another 5%".

The social media giant has long grappled with "concerns over the number of phoney identities that have proliferated on its platform, ramping up its safety and security staffing and opting to train automated systems to detect bad behaviour and remove them, on top of human moderators". According to reports, in the first three quarters of 2019 alone, Facebook took down 5.4 billion fake accounts.

The new court documents have alleged that "some employees expressed concerns about the alleged inflation of potential reach but no action has been taken". One filing also alleged that Sandberg made "substantive comments" in a meeting in October 2017 where potential reach was discussed.

Wehner allegedly "discussed fake and duplicate accounts in a meeting the same month, but on a later earnings call did not disclose the direct impact of duplicate and fake accounts . . . on potential reach", according to the complainants.

"These allegations are without merit and we will defend ourselves vigorously," Facebook has said.

In 2017, prior to the lawsuit, Brian Wieser, who is an advertising analyst and global president of business intelligence at GroupM, published a research that "showed a mismatch between census data and the number of users Facebook told potential advertisers it could reach".

Last year, a Financial Times investigation uncovered that such discrepancies remained in Facebook's Ads Manager tool. Facebook said at the time that the "figures shown on Ads Manager were estimates".