Facebook Faceoff

Facebook Agrees to $10 M. Settlement, You Can Now Opt Out of Having Your Face Appear in Sponsored Ads

A good day for Americans with faces!
sponsored stories Facebook Agrees to $10 M. Settlement, You Can Now Opt Out of Having Your Face Appear in Sponsored Ads

(Photo: Inside Facebook)

In a settlement agreement for a class action lawsuit filed yesterday, Facebook agreed to give users more control of their face. According to the terms of the agreement, which still needs to be approved by the judge, users will now be able to opt-out of having their likeness appear in a type of ad Facebook calls “Sponsored Stories,” says Reuters.

Back in December, Betabeat got a copy of a leaked document that showed how Sponsored Stories would feature the name of friend and the friend’s profile picture and an indication that they “liked” the advertiser in question. The social network thought it had a sweet new revenue stream locked up seeing as users are more likely to click on something when they see their friends’ face attached to it as an endorsement.

That prompted five Facebook members to file a class action lawsuit alleging that publicizing users’ “likes” without paying them or giving them a way out violated California law.

With the terms of this new settlement, Facebook faces a potential loss of $103 million in revenue, based on the estimates of one of the plaintiff’s economists. In fact, as TechCrunch recently noted, this new kind of ad seemed like a solution to Facebook’s nagging mobile problem since Sponsored Stories on mobile devices were getting 13 times the click-through rates and earning 11.2 times the money per impression compared to Facebook’s desktop ads.

In prior documents, Facebook agreed to donate $10 million to charity as part of the settlement, as well as pay $10 million in attorneys’ fees for the plaintiff.

But the settlement isn’t as big a victory for facial rights (a terms we just made up right now), as it sounds. For example, the new controls work on a story-by-story basis, so users can’t just opt out of the Sponsored Stories racket altogether. Court documents also show that Facebook only agreed to maintain these changes and disclosures for at least two years. Although we’re sure by then you’ll have bigger things to worry about, like, say what Zuck intends to do with your passport number.

Follow Nitasha Tiku on Twitter or via RSS. ntiku@observer.com