Documents unsealed in a Northern California district court show that top Facebook executives, including Sheryl Sandberg, knowingly falsified advertising-reach statistics to generate revenue by defrauding advertising customers. Facebook told advertisers that its ads reach many more people than they actually do. These falsified metrics were then used to win advertising sales and induce more spending on its platform.

According to the filing, “In fall 2017, Facebook COO Sheryl Sandberg acknowledged in an internal email she had known about problems” with false metrics for years. After employees proposed a fix to make the numbers honest, the corporation rejected the idea, noting that “the “revenue impact” for Facebook would be “significant.” One Facebook employee wrote, “My question lately is: how long can we get away with the reach overestimation?”

In response, the American Economic Liberties Project today called on state attorneys general, the Biden administration’s Department of Justice and Federal Trade Commission, and Congress to investigate what looks like criminal activity, including potential fraud. Economic Liberties also released a Facebook abuse tracker to show how often this firm is caught in controversial and unethical scandals.

“It is time for Facebook’s crime spree to end,” said Sarah Miller, Executive Director of the American Economic Liberties Project. “Facebook is a social media monopoly with such unchecked power that it can bully sovereign nations like Australia and flagrantly steal from its own advertising customers, including Fortune 500 companies. How long will regulators tolerate this lawlessness? Where are the white collar crime cops?”

This is the third major scandal involving serious allegations of Facebook defrauding participants on its platform. The first was the infamous ‘Pivot to Video,’ in which Facebook knowingly falsified video view metrics to induce major changes to media business models. Hundreds of journalists were laid off as a result. Advertisers sued Facebook, and the corporation settled the lawsuit with a payment to advertisers. The second was revealed late last year, when Facebook was found to be misrepresenting the effectiveness of ad campaigns by reporting inaccurate numbers through its ‘conversion lift’ tool for advertisers. The firm knew about the problem in September, but only told advertisers whose money was at stake in November. Facebook offered advertisers no way to verify the amount of damage done, they also refused to provide refunds. Instead, Facebook blocked advertisers from taking their advertising dollars elsewhere by offering advertising coupons in lieu of refunds. There are a litany of other online advertising scandals, including Facebook’s abuse of customer data during the Cambridge Analytica fiasco, and Facebook’s deal with Google unearthed by the Texas Attorney General to enable price-fixing in advertising markets. 

Economic Liberties’ Big Tech Abuse tracker is here.

The relevant court documents are here.

Financial Times coverage of the latest scandal is here.

Video of Congressman Nadler asking Mark Zuckerberg about Facebook’s ‘Pivot to Video’ is here.

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Economic Liberties works to ensure America’s system of commerce is structured to advance, rather than undermine, economic liberty, fair commerce, and a secure, inclusive democracy. Economic Liberties believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; foreign trade arrangements support domestic security and democracy; and wealth is broadly distributed to support equitable political power.