Complicating its efforts to accelerate advertising revenue, Facebook has agreed to make it clear to users that when they click to like a product, their names and photos can be used to plug the product. They would also be given a chance to decline the opportunity to be unpaid endorsers.
The changes are part of a settlement for a class-action lawsuit against Facebook in a federal district court in California. The agreement compels the company to change one of its most effective advertising tools, known as sponsored stories.
According to the agreement, Facebook users would be able to control and see which of their actions are used to generate advertisements seen by their Facebook friends. For users under 18, the company must give parents the opportunity to keep their children out of advertisements.
The settlement does not inhibit the company from using sponsored stories, which Facebook executives have repeatedly described as the most effective form of advertising. Both on the Web and on mobile devices, a sponsored story features the name and picture of a Facebook friend who has clicked the ‘like’ button for a product or organisation.
This is exactly why sponsored stories can be bewildering, or off-putting, for some users. Until now, Facebook users were unaware when and how they were exploited for advertising, and they may not have realised that a click on something as vague as a ‘like’ button could be used to enrich Facebook, the company.
Facebook has declined to comment on the settlement. In its defence, it argued that users gave “implied consent” every time they clicked the ‘like’ button for a particular page, whether it was Ben and Jerry’s ice cream or Barack Obama for President.
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It would amend its terms of use to explain that users give the company permission to use their name, profile picture and content. “This means, for example, that you permit a business or entity to pay us to display your name and/or profile picture with your content or information,” the court document reads.
The changes are to be made within six months. How many users will decline to participate in the ads remains to be seen. An economist hired by the plaintiffs’ lawyers, Fernando Torres, testified that giving users such a choice could cost Facebook $103 million in advertising revenue.
Luckily for the company, warnings and notices may not keep people from sharing on Facebook. A recent analysis of the accounts of a million Facebook users concluded that nine of 10 Americans — and slightly fewer Europeans — share information about themselves that can be misused, according to Secure.me, a company offering privacy services to social network users.
According to the settlement, Facebook has agreed to donate $10 million to non-profit organisations, including Consumers Union, the Electronic Frontier Foundation and several law school programs that specialise in privacy. It has also agreed to pay $10 million in plaintiffs’ legal fees.
©2012 The New York Times News Service