Facebook to pay out US$20m over ‘likes’ advert campaign

PUBLISHED : Wednesday, 28 August, 2013, 12:00am
UPDATED : Wednesday, 28 August, 2013, 2:10am


A judge has approved a deal in which Facebook will pay US$20 million for using members' "likes" as endorsements for ads without their explicit permission.

The pot of money is to be divvied up among lawyers, internet privacy rights groups and Facebook users who filed claims in the class-action lawsuit.

US District judge Richard Seeborg reasoned that the sum, a small fraction of the billions being sought in the case, was fair given the challenges of proving Facebook members were financially harmed or that signalling "likes" for products didn't imply some form of consent.

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

Seeborg estimated the size of the class represented in the suit as 150 million people, but noted that so few had filed claims that there was ample money in the settlement fund.

"The settlement as a whole provides fair, reasonable, and adequate relief to the class, in light of all the circumstances, including the low probability that a substantially better result would be obtained through continued litigation," the judge wrote in a ruling endorsing the deal.

The settlement urges Facebook to give members more control when it comes to how information is used regarding Sponsored Stories.

"Sponsored Stories, in Facebook's view, does nothing more than take information users have already voluntarily disclosed to their 'friends', and sometimes redisplays it to the same persons, in a column that also contains more traditional paid advertising," the judge wrote. "Plaintiffs faced a substantial burden in showing they were injured by the Sponsored Stories."

So few Facebook members have filed claims that those negotiating the settlement proposed paying out US$15 to each person and having enough cash left over for lawyers' fees and routing funds to internet privacy groups.

An original settlement rejected by the judge recommended the same pool of money, but allocated none of it to Facebook members.

The lawsuit was filed in early 2011 after Facebook launched its Sponsored Stories advertising programme.

Five plaintiffs filed the original class action, saying the "Sponsored Stories" programme shared "likes" without paying them or allowing them to opt out.

Facebook charged advertisers nearly US$234 million for Sponsored Stories between January 2011 and this month.

Facebook said yesterday it received more than 25,000 government data requests in the first half of 2013, with the largest number from the US.

The company's first "transparency report" showed Facebook received between 11,000 and 12,000 requests for data in the US, affecting between 20,000 and 21,000 users. It also received more than 14,800 requests from 70 other countries.

Facebook said the report includes "both criminal and national security requests".

Additional reporting by Reuters