Users will be able to opt out from the “holy grail” of advertising
Facebook will have to pay $20 million to settle a class-action lawsuit filed by five users who have claimed that publicising users’ ‘likes’ in sponsored adverts was against Californian Law.
As part of the settlement, the social network has also agreed to allow users more control over how their personal information is used in these adverts.
The Holy Grail
Facebook had previously been using people’s information in sponsored ads without paying them or giving them a chance to opt out. In the lawsuit, the social network called sponsored ads the “holy grail” of advertising, as their value was at least twice and up to three times that of an advert without a referral.
Court documents state that Facebook has agreed to maintain these changes and other new disclosure measures for at least two years. The settlement avoids the threat of court action, which could have involved more than 100 million potential class members.
The plaintiffs had argued that the value of the changes, according to an economist they had hired, was around $103 million (£66m). However, the amount that the social network will have to pay up is substantially less.
The company will have to spend $10 million to cover the plaintiffs’ legal fees, and will pay another $10 million to organisations devoted to educating people about how to use social networking technology safely. Groups expected to receive a windfall include the Electronic Frontier Foundation and the Centre for Internet and Society at Stanford Law School.
The settlement will have to be approved by US District Judge Lucy Koh, who earlier this week said that plaintiffs had proved that economic injury could occur through the use of this information.
“California has long recognised a right to protect one’s name and likeness against appropriation by others for their advantage,” she commented.
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