Facts

Facebook Inc., the largest social media services company in the world, provides free social networking service. Through its online platform, facebook.com, users can connect, share photos, videos and other content with friends and family online. While Facebook does not charge users to access its platform, it generates substantially all its revenue from selling advertising placements to marketers. Pricing for the ads is based on an auction system with Facebook charging for those ads in two ways: impression (the number of times content is displayed, no matter if it was clicked or not) and reach (the total number of people who see the content) or cost per click. dotStrategy Company operates the domain registry for the ".buzz" domain name. Some of the business enterprises that have purchased .buzz domain names from the company include those in the beekeeping industry, the cannabis industry, and the "geo" community-urbanites who use the .buzz website to let their followers know "what's the buzz" on their blogs. dotStrategy filed a class action lawsuit against Facebook.

PLAINTIFF'S CONTENTIONS: In 2019, of Facebook's close to $71 billion revenue, about $70 billion was from advertising. Facebook's policy disallows fake accounts and violates Facebook's Terms of Use and its authenticity policy. Because Facebook advertisers pay for each interaction or engagement with Facebook users, of import for businesses advertising through Facebook is that the business be only charged for interactions with real people, rather than fake accounts which could include automated accounts not directly controlled by humans but rather bots or scrapers. In 2019, there were approximately 125 million fake accounts. Plaintiff dotStrategy alleged that defendant Facebook stated to prospective advertisers that they would only be charged for advertising delivered to authentic accounts. According to dotStrategy, Facebook presented to advertisers that it prevents and detects invalid clicks. This representation could mean, according to dotStrategy, that when Facebook did detect and remove a fake account, Facebook would go back and audit the fake account for prior "interactions" with advertisements and would refund those advertisers for the charges made to them for those fake accounts. Through its deceptive and misleading actions, Facebook violated California's Unfair Competition Law, and engaged in unfair, unlawful acts and practices.

DEFENDANT'S CONTENTIONS: Defendant Facebook noted that dotStrategy, in seeking class certification, needed to prove that class members were actually exposed to the misrepresentations it was asserting and could not do so. Moreover, according to Facebook, dotStrategy also failed to show that it lost money or property as a result of Facebook's alleged conduct. Facebook contended that plaintiff dotStrategy had no evidence to prove that it was charged for any invalid clicks. dotStrategy thus had no proof it suffered economic injury as a result of any supposed reliance on a statement about charges for clicks. Reasonable advertisers should understand that online advertising will involve some amount of "fake" account activities and while Facebook does all it can to prevent it, it would be nearly impossible to eliminate it.

Result

Facebook's motion for summary judgment was granted because dotStrategy had no evidence it was charged for any invalid clicks.

Other Information

In November 2020, Facebook successfully narrowed the case from over forty alleged misrepresentations to just three. Then in June 2021, they defeated certification of a nationwide class of Facebook advertisers based on dotStrategy's failure to prove exposure to the statements, and then defeated a Rule 23(f) petition.