Facebook Inc (NASDAQ:FB) Reaches Settlement Over Personal Ad Service
Facebook Inc (NASDAQ:FB) has agreed to let 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 $103 million, in the opinion of one economist hired by the plaintiffs. However, Facebook just have to pay over $20 million to end up the case, 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 100 million potential class members.
Under the terms of a settlement agreement filed on Wednesday, 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 $103.2 million, 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 $10 million to organizations devoted to educating people about how to use social networking technology safely. Groups set to receive money include the Electronic Frontier Foundation and the Center for Internet and Society at Stanford Law School, according to the court documents.
Shares of FB are trading higher by 1.44% in the pre-market session.