U.S. Senator Maria Cantwell (D-Washington), chair of the Committee on Commerce, Science and Transportation, wrote Federal Trade Commission (FTC) Chair Lina Khan to urge the FTC to investigate allegations Meta/Facebook misled its advertising customers and the public in its claims about ensuring brand safety and the reach of its advertisements, in violation of federal law prohibiting unfair or deceptive acts or practices in trade or commerce. Here is a copy of the letter:

Dear Chair Khan:

I am writing regarding allegations that Meta (f/k/a Facebook, hereinafter “Facebook”) may have violated the Federal Trade Commission Act’s prohibition against unfair or deceptive acts or practices in trade or commerce, and to urge the FTC to commence an investigation into these matters. Recent revelations and public documentation suggest that Facebook may have misled its advertising customers and the public about its processes for ensuring brand safety and about the reach of its advertisements, both core aspects of Facebook’s business model.

Facebook’s representations to advertisers take on even greater importance given Facebook’s large share of the digital advertising space. As the Senate Commerce Committee detailed in a 2020 report, Facebook reportedly controlled approximately 74% of the social media market and now reportedly controls 24.1% of all of U.S. digital advertising spending; Facebook’s dominant position in the ad marketplace means that advertisers and publishers, including struggling local news outlets all over the country, may have faced unfair competition by Facebook, impacting their revenues and ability to compete online.

Facebook has long made claims about the safety of its product for brands, and even more importantly, about the safety of its product for Facebook users. Facebook’s Community Standards Enforcement Report states that its algorithms remove 97% of the content it eventually takes down for hate speech before the content is posted. But this metric could significantly misrepresent the effectiveness of Facebook’s algorithms, as whistleblower documents show that Facebook believes that its processes miss more than 90% of hate speech content despite being 97% effective at catching the hate speech Facebook eventually takes down. Facebook may thus have made material misrepresentations or omissions to advertisers regarding the effectiveness of its brand safety controls, including its ability to remove criminal content. 

Until quite recently, Facebook offered prospective advertisers two key measures of an ad’s potential success — (1) Potential Reach; and (2) Estimated Daily Reach. Potential Reach (which is an element of Estimated Daily Reach) approximates the number of people in a particular area who may view a business’ ad and, according to Facebook, is “arguably the single most important number in our ads creation interfaces.” Understandably then, advertisers of all sizes plan and budget for campaigns that maximize their ads’ Potential Reach, as estimated by Facebook. However, public reporting as well as Facebook’s own statements and documents seem to indicate that Facebook may have known that Potential Reach metrics may have been inaccurate. Public analyses from as far back as 2017 show how Facebook claimed that its ads could have a Potential Reach that exceeded the population of 18- to 34-year-olds counted in each of the 50 states by the U.S. Census Bureau.

The Commission may allege deception under Section 5 of the FTC Act prohibiting unfair and deceptive practices in or affecting commerce, “if there is a representation, omission or practice that is likely to mislead the consumer acting reasonably in the circumstances, to the consumer’s detriment.” Thus, because evidence suggests that Facebook may have deceived its advertising customers about its brand safety and advertising metrics, Facebook may have engaged in deceptive practices in violation of the FTC Act.

In addition, the public information suggests that Facebook’s potential misrepresentations about brand safety and advertising metrics may be unfair, as well as deceptive. In evaluating whether the conduct is unfair, the Commission may consider (1) that the advertising purchased by brands due to Facebook’s brand safety and advertising representations are “significant,”; (2) the absence of material countervailing benefits to competition and consumers from any misrepresentations of advertising metrics; and (3) that, given that Facebook employs a walled garden system, advertisers could not have independently verified Facebook’s reported brand safety activities, ad metrics, or reasonably avoided advertising on Facebook, much less given Facebook’s market dominance.

A thorough investigation by the Commission and other enforcement agencies is paramount, not only because Facebook and its executives may have violated federal law, but because members of the public and businesses are entitled to know the facts regarding Facebook’s conduct as they make their decisions about using the platform.

I urge the FTC to immediately commence an investigation into Facebook’s representations with respect to brand safety, Potential Reach, and similar metrics with respect to its advertising business and, if that investigation reveals that the company has in fact violated the law, to pursue all available sanctions as appropriate. Such actions could include action under Section 19 of the FTC Act or partnering with state attorneys general in an appropriate court to pursue monetary relief for Facebook’s advertisers and disgorgement of Facebook’s ill-gotten gains, a strategy the Commission has pursued in other recent cases.

 

Contributed by America’s Newspapers and U.S. Sen. Maria Cantwel

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