Internal Facebook Inc. emails released to the court reveal concerns from an employee that the company misrepresented its estimated advertiser audience, calling the practice “deeply flawed.”
But senior executives did not want to fix the problem because the impact on revenues would have been “significant”, according to a case filed last Wednesday in federal court in San Francisco.
Facebook is leading a 2018 lawsuit by a small business owner alleging that the social media giant has for years inflated its estimates of how many people an ad could and would reach. A judge this month declined to dismiss the fraud allegations and said the company should prepare for trial, while dismissing the breach of contract allegations.
The company has sought to keep some documents confidential due to concerns about their sensitivity, but U.S. District Judge James Donato has ruled that disclosing them is in the public interest.
Facebook has come under fire after disclosing errors in the way it calculates ad statistics and has since made changes to clarify how those numbers are determined. Lawyers for the plaintiffs argue that internal communications show Facebook knew its “potential reach” was misleading, even though the company downplayed the measure in court proceedings.
“Facebook knew the problem was largely due to bogus and duplicate accounts,” but made a “deliberate decision” not to remove those accounts from potential reach, the filing said.
An unidentified product manager for potential reach said, “This is revenue we should never have generated given that it is based on bad data.”
Facebook did not immediately respond to a request for comment after normal business hours. The company said when filing the case that it was unfounded.
Donato did not address the merits of the fraud allegations in his February 12 decision, but said the complainant had met legal requirements to deal with the allegations that Facebook knew of issues of potential scope and attempted to address them. hide.
The TBEN earlier reported Wednesday’s filing.
The case is Singer v. Facebook Inc., 3: 18-cv-04978, US District Court, Northern District of California (San Francisco).
Copyright 2021 Bloomberg.
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