• by Wendy Davis , 7 hours ago

Siding against Meta Platforms, a federal judge has rejected the company's bid to dismiss a lawsuit alleging that the company overcharged Facebook advertisers a collective $4 billion.

The decision, issued in writing Tuesday by U.S. District Court Judge Charles Breyer in the Northern District of Columbia, came in a class-action complaint brought last year by the South Carolina gym Iron Tribe Fitness.

The gym alleged that Facebook's auction system failed to protect advertisers from overbidding. Iron Tribe specifically alleged that starting in 2013, and continuing until at least 2017, Facebook purported to use a version of a “second price” auction system but instead, inadvertently, used a “blended price” system.

In a “second price” auction, the company with the highest bid wins the auction, but isn't charged more than the company with the second highest bid. But in a “blended price” system, the winning bidder is charged a price between its bid and the bid that came in second.

The move to a “blended price” system was due to an error in a 2013 software update, according to Iron Tribe's complaint. The gym claimed Facebook learned of the error in 2017 but, instead of immediately fixing the issue for all advertisers, "launched a slow rollout of the correction."

Iron Tribe's complaint centered on the claim that Meta broke its contract with advertisers.

Last year, Breyer dismissed Iron Tribe's original complaint, ruling that the gym failed to allege exactly how Facebook's contract with advertisers required a "second price" auction.

Iron Tribe then amended its suit to include allegations regarding Facebook's statements to advertisers. Among other statements, Facebook allegedly told advertisers that it would charge them only the “minimum amount" they needed to pay, and that they should enter their “true maximum bid.”

Breyer said in his written ruling that those statements were ambiguous, adding that questions about how to interpret the statements couldn't be resolved without more evidence.

He gave several reasons for finding the statements ambiguous, including that Facebook didn't define all of the terms in the statements, including the phrase "minimum amount that you need to pay."

Breyer hasn't yet set a date for trial.