Facebook settlement on ad case

City A.M. Reporter
FACEBOOK has agreed to allow users more control over how their personal information is used in its “Sponsored Stories” ad feature, part of a deal to resolve litigation against the social networking company.

The value to Facebook members resulting from the changes is about $103m, in the opinion of one economist hired by the plaintiffs.

But the amount Facebook will actually pay to settle the case is just over $20m, according to court documents filed on Wednesday.

A “Sponsored Story” is an advertisement that appears on a member’s Facebook page and generally consists of another friend's name, profile picture and an assertion that the person “likes” the advertiser.

Five Facebook members filed a lawsuit seeking class-action status against the social networking site, saying it violated California law by publicizing users’ “likes” of certain advertisers without paying them or giving them a way to opt out.

The case involved over 100m potential class members.

Under the terms of a settlement agreement, Facebook members will be able to control which content can be used for Sponsored Stories. Facebook agreed to maintain these changes and other new disclosures for at least two years, according to court documents.

Attorneys for the plaintiffs say the changes to “Sponsored Stories” are worth $103.2m, based on an economist’s analysis of the revenue each ad brings to Facebook. Those figures were redacted in the court documents.

Facebook has agreed to pay $10m to organisations devoted to educating people about how to use social networking technology safely.

Facebook will also pay an additional $10m for plaintiff attorneys’ fees. A Facebook representative declined to comment.