Steelhouse countersues criteo alleging over 50% of company’s revenue comes from fraudulent sources

Los angeles--(business wire)--steelhouse, an advertising software company, today filed suit in federal court in the central district of california [case number 2:16-cv-04207 svw (mrwx)] accusing criteo sa (nasdaq: crto), a paris, france-based retargeting company, of false advertising, intentional interference with contract, intentional interference with prospective economic advantage and unfair competition. in the suit, steelhouse alleges that 52% of criteo’s clicks, the primary source of the company’s revenue, do not originate from any known website or publisher. steelhouse uncovered these findings after analyzing third party customer data that showed the source of criteo’s traffic for customers that were active with both steelhouse and criteo since january 2016. additionally, the lawsuit alleges criteo inflates its performance through fraudulent click practices; as an example, 16% of criteo clicks are from users clicking the same advertisement within a 30-minute period – eight times the industry standard. “criteo has an insatiable appetite for clicks to fuel its revenue model and growth,” said mark douglas, steelhouse president and ceo. “their average click rate is over four times the industry standard which is consistent with recent reports by u.s. senators charles schumer (d-n.y.) and mark warner (d-va.) about fraudulent click practices in the industry.” the suit also states that criteo’s arbitrage revenue model is inflating its profits at the expense of its customers. according to the suit, criteo’s pricing model deceives customers into believing that an increased cpc bid will yield better performance for the customer. instead, the increased bid results in no additional traffic for the advertiser. “criteo has built its company on a black box model, which gives its advertisers no visibility into how their advertising dollars are being spent. simply put it’s a money in, clicks out model – this is why the retargeting industry as a whole has moved away from a cpc model,” added douglas. the steelhouse countersuit was filed concurrently with steelhouse’s response to a lawsuit filed by criteo on june 14, 2016, which steelhouse dismissed as without merit. about steelhouse steelhouse is a data-driven advertising software company delivering innovative advertising solutions to brands, agencies, and direct marketers. steelhouse works with premium brands world-wide using the steelhouse advertising suite, a cloud-based advertising platform, to create the ultimate personalized brand-customer experience for marketers.
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