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Facebook has settled a lawsuit concerned “Sponsored Stories” that could have cost the company billions if the plaintiffs had won, according to a Reuters report.

In light of Facebook’s team taking the company public last Friday, it will have to start making more careful decisions on financial matters. Facebook’s shares on the Nasdaq exchange disappointingly closed at $31 on Tuesday.

The proposed class-action lawsuit was brought to federal court in San Jose, Calif. by five users who were upset at Facebook’s “Sponsored Stories.” That type of ad showed a product and noted which of your friends “liked” that advertiser. Reuters said the users alleged that the “Sponsored Stories” feature violated their right to publicity under California law.

The terms of the settlement were not listed, but it will almost certainly be less expensive to settle than to drag the case through court. If it had become a class-action suit, it could have included the nearly one-third of the U.S. that is on Facebook.

Mark Zuckerberg photo: Jim Merithew/Wired


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