Facebook has agreed to pay $20m to settle a class action lawsuit, after it included users’ names and photos in paid advertisements.
Some 614,000 users who appeared in a Sponsored Story on the site without giving their consent will now receive $15 each. That’s slightly more than anticipated under an earlier proposal, partly because lawyers and activists will receive less.
For Facebook, whose market cap has just surpassed $100bn, this is hardly an Erin Brockovich moment. But it’s another reminder that there’s a fine line between social advertising – which uses your friends’ buying habits to influence your own – and anti-social advertising, which just annoys everyone.
Any company hoping to launch targeted advertising services should be watching the fate of UK start-up Phorm with great interest. In particular, they should take note of what this says about the public’s double standards on privacy.
Phorm is trying to build a new ad platform, serving ads targeted around users’ internet habits and interests. It is hoping to make this acceptable to the general public with reassurances that no personally identifiable information is kept or stored as part of the process.