French ad tech company Criteo has filed a lawsuit alleging that rival firm SteelHouse ran a "counterfeit click fraud scheme", leading to "substantial injury and damage" to its business and reputation among online advertisers.
Both Criteo and SteelHouse place display ads which use a pay-per-click pricing model, which only generate revenue when users click through, with charges based on click-through rates and conversion rates.
Criteo is alleging that SteelHouse "counterfeited clicks to trick e-tailers into attributing sales to SteelHouse that should have been attributed to Criteo, other competitors and partners, or direct traffic", effectively stealing revenues from Criteo and similar firms.
The suit also claims that SteelHouse used the figures generated by the fraud to advertise that its technology "consistently outperformed" Criteo's services in head-to-head comparisons, leading to Criteo losing out on important business.
According to documents filed relating to the suit, Criteo discovered the click fraud following a detailed log analysis of two head-to-head comparisons where its own products were tested against SteelHouse's. The tests were performed as part of SteelHouse's efforts to gain a contract with shoe retailer TOMS, at the time a client of Criteo.
The analysis carried out by Criteo supposedly shows many of SteelHouse's clicks were made just seconds after the same customers had clicked on Criteo ads, which triggered suspicions at the ad tech firm and led to further investigation.
Criteo also claims that it presented its findings to executives at SteelHouse, who said they would act on it to remove the behaviour but failed to do so, instead making "false statements to e-tailers in an attempt to minimize its misconduct".
While both SteelHouse and Criteo operate in the online advertising space, Criteo is considerably larger, a public firm that generated revenues of over $1bn (£700m) in 2015 compared to SteelHouse, which is a private company with a much small market share of top websites. SteelHouse has raised around $64m in funding since launching in 2010.
Criteo is seeking millions of dollars in damages and legal fees, and aims to have injunctions placed on SteelHouse that will prohibit from acting in ways that Criteo claim are in violation of laws relating to competition, fraud, false advertising and intentional interference with prospective economic advantage.
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