Microsoft-owned LinkedIn has agreed to a $6.625 million settlement to resolve claims by advertisers who alleged they were overcharged due to inflated user engagement metrics for video advertisements. As part of the settlement, LinkedIn will hire an independent auditor to review its advertisement metrics, a condition detailed in the plaintiffs’ request for preliminary approval in the U.S. District Court for the Northern District of California.
LinkedIn, a social media platform focused on professional networking, has updated its agreements with advertisers in response to the legal proceedings. The settlement compensation will be distributed among advertisers who used LinkedIn’s advertising services from January 2015 through May 2023, encompassing roughly 300,000 members. The settlement is still pending approval by U.S. Magistrate Judge Susan van Keulen in San Jose.
Despite agreeing to the settlement, LinkedIn, headquartered in Sunnyvale, California, has not admitted any wrongdoing and continues to deny any improper actions.
Origins of the Lawsuit
The lawsuit traces back to November 2020, when companies such as TopDevz of Sacramento and Noirefy of Chicago accused LinkedIn of exaggerating video ad viewer numbers to overcharge advertisers. The plaintiffs claimed LinkedIn's metrics were inflated by counting views from videos that played in users' LinkedIn apps but were off-screen due to users scrolling past them.
This legal action followed LinkedIn’s acknowledgment in November 2020 that its engineers had fixed software errors that might have led to over 418,000 instances of overcharging, most of which were for amounts less than $25. LinkedIn suggested that it had compensated nearly all affected advertisers.
Legal Proceedings
In December 2021, Judge van Keulen dismissed the lawsuit with prejudice, stating the plaintiffs had not proven their legal remedies were insufficient before suing under two California statutes that offer only equitable remedies such as restitution. She noted that LinkedIn was not implicitly required to provide "accurate ad metrics," referencing its disclaimer that absolves it of responsibility for click fraud or unauthorized third-party activities that could inflate ad costs.
The advertisers appealed this decision, but the appeal was paused as the parties entered settlement talks.
Financial Context
Amidst these legal proceedings, Microsoft reported a 17 percent revenue increase for the quarter ending March 31, with overall revenue reaching $61.9 billion. LinkedIn itself saw a 10 percent revenue boost during this period. The tech giant is set to release its most recent quarterly results on Tuesday (July 30).