Uber Sues Its Ad Agency For Fraudulent Advertising

The good news for Uber is that data underscore how strong its underlying, organic growth is. JL

Alison Griswold reports in Quartz:

Uber is suing for about $40 million for fraud, alleging it was actively misled as Fetch “squandered tens of millions of dollars to purchase nonexistent, nonviewable, and/or fraudulent advertising.” This is a relatively novel position for Uber, which is a named defendant in about 250 federal cases but rarely on the offensive. Uber says the number attributable to paid mobile ads fell, but the number of organic installations rose by almost the same amount. The entire complaint is basically an ad for how terrific Uber’s organic user growth is.
Uber has always touted its organic user growth but the fact of the matter is that like any other company, it also relies on ads.
From January 2015 to sometime in 2017, Uber contracted with mobile advertising agency Fetch to deliver some of those ads. Fetch bought ads for Uber directly in the US, Mexico, France, the Philippines, Romania, and Singapore, and indirectly in assorted other countries. Uber paid Fetch for “legitimate clicks” that resulted in Uber app downloads, user signups, and first trips being taken. From 2016 through Q1 2017, Uber says it paid Fetch $82.5 million.
All was well until early this year, when Uber says it noticed its ads appearing on Breitbart, a far-right news site that was supposed to be blacklisted from its ad campaign. Uber says an investigation found that Fetch reported the clicks that came from ads placed on Breitbart as though they’d come from other places: “Magic_Puzzles,” “Battleship_War_30,” “Snooker_Champion.” Then, in March, Uber suspended its entire Fetch campaign, but claims it saw no drop in overall app installations. The company says the number of installations attributable to paid mobile ads fell, but the number of organic installations rose by almost the same amount.
Uber is now suing Fetch for about $40 million for fraud, alleging it was actively misled as Fetch “squandered tens of millions of dollars to purchase nonexistent, nonviewable, and/or fraudulent advertising.” This is a relatively novel position for Uber, which is a named defendant in about 250 federal cases but rarely on the offensive. (One of those cases, a lawsuit brought by self-driving carmaker Waymo, could head to trial next month.)
“With Fetch, we learned the age-old ‘buyer beware’ the hard way,” Uber said in a statement on Sept. 18. “Fetch was running a wild west of online advertising fraud, allowing Uber ads on websites we wanted nothing to do with, and fraudulently claiming credit for app downloads that happened without a customer ever clicking on an ad.”
Fetch said in its own statement: “We are shocked by Uber’s allegations which are unsubstantiated, completely without merit, and purposefully inflammatory so as to draw attention away from Uber’s unprofessional behaviour and failure to pay suppliers.”
On the one hand, if the allegations are true, it’s understandable that Uber wants its money back. On the other, the subtext of this lawsuit is weirdly great for Uber. The company claims it thought it was paying money for ads to drive growth and then it found out that it was paying money for ads that weren’t driving much growth at all and were just claiming to drive growth that was happening organically all along. Amazing! What better way to justify your organic growth story to investors?
The entire complaint is basically an ad for how terrific Uber’s organic user growth is. Really, you could argue that Fetch did a stupendous job. You couldn’t buy advertising that good if you tried. Only if you didn’t.