Facebook Forced to Pay $40 Million to Advertisers in Settlement

Facebook as a company relies on brands buying ad space on its platform for revenue. The whole business model that Facebook operates on is ad based, so any problems that occur with ads within the context of what the platform is managing to do all in all is something that is really going to have a negative impact on the future of the tech giant. The recent scandal that broke out surrounding Facebook’s inflation of viewer counts on videos is something that has put a dent in the social media company’s plans for the future for sure.

Recently, a number of advertisers that had bought ad time on Facebook, specifically in videos that were shown on Facebook, sued the social media giant saying that the company had inflated the viewing times that a lot of users had given them. This gave the company bad data that they really could not act on since it was not indicative of the actual level of interest that the various users of the platform were showing regarding the manner in which they approached the numerous products that were being marketed to them on a more or less regular basis.

As a result of the fact that Facebook actually did inflate viewing times, the social media company is paying $40 million dollars as a settlement to these advertisers. $12 million will go to the attorneys that represented these advertising agencies, with the rest being a refund of sorts that is essentially meant to make up for the fact that the companies did not get the results that they were promised.

This might very well make other companies think twice before using Facebook to advertise, although in the long run this probably won’t make too much of a difference because Facebook is simply too big at this point for it to really matter.

Photo: Stephen Lam/Reuters

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