Senior people at Facebook knew "for years" that one of its key metrics was inflating the number of users who see ads, but did not disclose or fix the problem, a lawsuit against the company has alleged.
The lawsuit, filed by a small-business owner in Northern California in 2018, alleges that Facebook knew that its "potential reach" metric, which tells advertisers their potential audience size, was "inflated and misleading".
The documents also name Sheryl Sandberg, Facebook’s chief operating officer, as part of internal communications in 2017, as well as chief financial officer David Wehner. However, Sandberg and Wehner’s comments were largely redacted from the documents due to commercial sensitivity.
Facebook said: "These allegations are without merit and we will defend ourselves vigorously."
The social media giant is accused of exaggerating the potential reach metric, which tells marketers how many people their Facebook ad should reach. The lawsuit alleges that the number actually gives the total number of accounts that can be reached, which is prone to include fake and duplicated accounts.
Facebook said it took down 5.4 billion fake accounts in the first three quarters of 2019 – more than double the 2.5 billion monthly active users it claims to have on its social media platforms Facebook and Instagram, as well as messaging apps WhatsApp and Messenger.
The company also suggested during its most recent financial earnings reporting that about 11% of its user base – about 225 million – are duplicate accounts. Fake accounts, meanwhile, represented 5% (about 125 million) of global monthly active users, it said.