Snapchat Unseals Document For Inflated User Metrics Lawsuit

Snap Inc., the makers of social media app Snapchat, finally obliged to release the complaint filed against the company by a former employee last January. The lawsuit, filed by the former leader of Snapchat's user growth team Anthony Pompliano, alleges that Snap Inc. lied about the key metrics of the social network prior to the company's IPO last month. In the unredacted lawsuit, Pompliano detailed how the management of Snapchat lied about the daily active users, retention rate, and the percentage of people completing the sign-up process. According to Pompliano, Snapchat misled the advertisers and the public about having more than 100 million daily active users on the social network in 2015 when the actual DAU according to analytics systems was around 95 million.

Pompliano says the same false data was used to persuade private investors to invest capital in Snapchat. Snapchat's growth is also allegedly lower than what the company claims, with its daily active user growth remaining essentially flat in the first three quarters of 2015. Furthermore, the retention rate is allegedly lower than what the company claimed, with the actual retention rate of the social network at 20% which is half of what Snap Inc previously announced. Aside from the reports of inflated figures, Pompliano also alleges that Snap management asked him to build an organizational chart of Facebook complete with its executives and then identify individuals that Snap Inc. could poach from the social media giant.

In his lawsuit, Pompliano claims that his refusal to divulge important information regarding his former employer and his refusal to be involved in the "institutional pandemic" of lying regarding user metrics, led to his dismissal from the job three weeks after he entered Snap Inc. Pompliano also claims that Snap Inc waged a smear campaign against him, as the company knows he holds information damaging to Snap Inc.'s prospects for its IPO. Snap Inc. had its Initial Public Offering last month, with the company share prices up by more than 41% in the first day, raising $3.4 billion in capital for the social network and making its IPO the biggest the US stock market has had since 2014. This is an outstanding feat for a company reporting massive financial losses, with the company's losses in 2016 bigger than its revenue. Snap Inc. itself warned that like many tech startups, the company may never reach profitability.

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Mark Real

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Mark Real has written for Androidheadlines since 2017 and is a Staff Writer for the site. Mark has a background in sciences and education. He is passionate about advancements on hardware and software technologies and its impact on people’s lives. Contact him at [email protected]
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