- Microsoft’s LinkedIn has agreed to pay $6.625 million to settle a proposed class action lawsuit accusing the company of overcharging advertisers by inflating video ad view metrics.
- Inflated metrics can lead to misguided investments and lost revenue, eroding trust in advertising platforms.
OUR TAKE
It seems LinkedIn hit a snag this time, shelling out over $6.6 million to settle with advertisers. This reminds me of Facebook’s similar mishap with ad data transparency. Tech giants really need to step up their game in this area. LinkedIn denies any wrongdoing but is willing to pay up and even hire an external auditor for two years, which gives the market some reassurance. However, the root of the issue – inflating video ad ‘view’ counts by counting even when users scrolled past them – is quite amusing. Fortunately, affected advertisers can recoup some of their losses, which is a relief. Hopefully, these platforms will be more honest in the future and not waste advertisers’ money.
–Miurio huang, BTW reporter
What happened
Microsoft’s LinkedIn has agreed to pay $6.625 million to settle a proposed class action lawsuit accusing the company of overcharging advertisers by inflating video ad view metrics. This preliminary settlement was filed late Thursday in the federal court of San Jose, California, and now awaits approval from U.S. Magistrate Judge Susan van Keulen.
The lawsuit, spearheaded by TopDevz of Sacramento, California, and Noirefy of Chicago, alleged that LinkedIn counted video ad “views” from users’ apps even when the videos played off-screen as users scrolled past them. The advertisers accused LinkedIn of artificially inflating ad metrics, leading to overcharges.
This legal battle began shortly after LinkedIn disclosed in November 2020 that its engineers had fixed software bugs which may have caused over 418,000 overcharges, most of which were under $25. LinkedIn provided credits to nearly all affected advertisers at the time.
Despite agreeing to the settlement, LinkedIn denied any wrongdoing. As part of the settlement, LinkedIn also committed to employing an outside auditor for the next two years to review its ad metrics, ensuring accuracy and transparency.
The settlement encompasses U.S. advertisers who purchased ads on LinkedIn from January 2015 through May 2023. LinkedIn stated that the settlement “underscores our commitment to the integrity of our ads products and providing a trusted platform for our members and customers.”
LinkedIn is headquartered in Sunnyvale, California, while Microsoft is based in Redmond, Washington. In the nine months ending March 31, Microsoft’s profits totaled $66.1 billion.
Also read: GOP demands oversight on Microsoft’s $1.5B deal with UAE’s G42
Also read: Microsoft’s $650M AI hire triggers major UK regulatory probe
Why it’s important
This settlement sheds light on the crucial issue of transparency in digital advertising metrics. Advertisers rely heavily on accurate data to make informed decisions about their marketing strategies. Inflated metrics can lead to misguided investments and lost revenue, eroding trust in advertising platforms.
The case underscores the importance of accountability for tech companies in maintaining the integrity of their advertising products. By agreeing to an independent audit of its ad metrics, LinkedIn is taking steps to restore advertiser confidence and ensure future accuracy. This move could set a precedent for other social media platforms to follow, emphasising the need for external oversight in verifying ad performance metrics.
The lawsuit’s history also highlights the complexities and long timelines often involved in class action cases. Initially dismissed by Judge van Keulen in December 2021, the advertisers appealed the decision but chose to mediate the dispute, leading to this settlement. This reflects a growing trend where parties prefer settlement over prolonged litigation, balancing legal costs with achieving resolution.
Furthermore, this case illustrates the significant financial implications of digital advertising disputes. With the settlement amounting to $6.625 million, and lawyers potentially seeking up to 25% of this for legal fees, the financial stakes are high. This should serve as a warning to other companies about the potential costs of non-compliance with advertising standards.
This settlement is a pivotal moment for LinkedIn and the digital advertising industry. It highlights the need for transparent, accurate ad metrics and the role of independent audits in maintaining advertiser trust. As digital advertising continues to grow, ensuring integrity and accountability in how ad views and interactions are measured will remain a critical concern for both advertisers and platforms alike.
