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On Tuesday, news spread about how Facebook was being accused of lying to advertisers by overstating the average time its users spent watching paid video advertisements. While not exactly new, the extent of the alleged misdeeds was publicly circulated for the first time as outlined in an amended complaint in California federal court from a group of suing advertisers now seeking punitive damages for fraud.
“Facebook did not discover its mistake one month before its public announcement,” states the amended complaint. “Facebook engineers knew for over a year…. In addition to Facebook knowing about the problem far longer than previously acknowledged, Facebook’s records also show that the impact of its miscalculation was much more severe than reported. The average viewership metrics were not inflated by only 60-80%; they were inflated by some 150 to 900%.”
The amended complaint was filed in August — and heavily redacted.
Although the attention is now on what Facebook knew and when, the social media giant’s initial efforts to keep the information under seal shouldn’t be overlooked. Facebook made a fairly unusual argument to cover up the allegations.
Facebook’s lawyer David Silbert told the judge that the above paragraph selectively used information from internal discussions and documents produced by Facebook during discovery.
“Disclosure of any of this sensitive information described above would harm Facebook’s competitive position because it would reveal mischaracterized information to Facebook’s customers, competitors, and the market as a whole,” wrote Silbert. “Courts in this district regularly seal categories of confidential information concerning sensitive business practices.”
Yes, while true that courts do routinely allow litigants to keep private their trade secrets, pretty much everyone in court deals with information they believe has been “mischaracterized.” Accepting that as a reason to seal court documents threatens the public nature of the American judiciary.
The plaintiffs then complained that Facebook couldn’t really identify any trade secret that would be disclosed nor specify how a competitor might use the information to gain an unfair advantage. The challenged allegations, they argued “fell into the category of embarrassment.”
Afterward, there was more fussing over whether the briefing on whether or not to seal should itself be sealed. The court allowed it and reserved judgment on the underlying material.
Fortunately, Facebook then saw the light. While not consenting to unseal other confidential information, it entered into a stipulation with the plaintiffs that it would no longer oppose the unsealing of the amended complaint. Thus, ended the cover-up of the alleged cover-up — and even the cover-up of the cover-up of the alleged cover-up.
As for the newest claim in the case that Facebook has perpetrated fraud by falsely and knowingly inflating the average time that Facebook users spend watching videos, Facebook has submitted a motion to dismiss premised on the argument that plaintiffs haven’t sufficiently shown that advertisers relied on these viewership metrics when deciding whether to purchase video advertising.
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