Business

Facebook will shell out $20M in ‘Sponsored Stories’ settlement

When companies do bad things, sometimes they have to pay for it. Most of the time, they don’t have to pay very much.

Facebook has reached a final settlement to pay $20 million after a 2011 class-action suit accused it of violating user privacy with its “Sponsored Stories” advertising.

The feature, which earned Facebook roughly $234 million from 2011 to 2012, allowed Facebook to display a product alongside the profile photo and name of a Facebook user who”liked” it. It makes every Facebook user an unofficial (and largely unwilling) brand endorser, which is exactly why users sued the company.

The problem, as presiding judge Richard Seeborg writes in his ruling, is that while the plaintiffs made a good case for why Facebook benefited from its Sponsored Stories, they were less successful at showing how they were harmed — a common criticism of those who raise these sorts of privacy concerns.

Under the settlement, anyone who filed a claim will be entitled to a percentage — $15 — of the $20 million payout.

Cases like this underscore a fundamental reality about our relationships with the online services we use : Companies like Facebook and Google actively make money by monetizing user information, not protecting it. But none of that’s really news anymore.


VentureBeat is studying the state of marketing technology. Chime in, and we’ll share the data.