Earlier this week, we told you that Facebook had settled a lawsuit centered around their Sponsored Stories with a $10 million cy-pres settlement which would have the money go to charity. The class-action case was brought by five plaintiffs from California who claimed that the Sponsored Stories violated state law by publicizing user data without compensation. They also contested Facebook’s Sponsored Stories policy, which currently does not not allow users to opt out.
In short, they sued because Facebook has been using their likeness as advertisements without their consent, without compensation, and without the ability to control how it’s being used.
What we didn’t know, however, is that as part of the settlement, Facebook has also agreed to amend its Statement of Rights and Responsibilities as well as implement an opt-out mechanism for users who do not wish to have their past activities used as Sponsored Stories.
Reuters reports that “Under the terms of a settlement agreement filed on Wednesday, Facebook members will be able to control which content can be used for Sponsored Stories. Facebook agreed to maintain these changes and other new disclosures for at least two years, according to court documents.”
Of course, this doesn’t mean that you won’t see Sponsored Stories in your news feed, just that you’ll now have more control over which of your activities can be used as Sponsored Stories that your friends see.
Here’s exactly what the settlement says under “User visibility and control over Sponsored Stories”:
Facebook will create an easily accessible mechanism that enables users to view the subset of their interactions and other content that have been displayed in Sponsored Stories. Facebook will further engineer settings to enable users, upon viewing the interactions and other content that have been used in Sponsored Stories, to control which of these interactions and other content are edible to appear in additional Sponsored Stories.
This little change is supposedly worth about $103.2 million in lost revenue for Facebook, according to the settlement.
As you can see, the future “mechanism” will allow users to opt out of past activities being used as Sponsored Stories, and there’s no mention of a blanket “opt out of any and all association with Sponsored Stories” option. The fact that users are going to have to go into settings and chose which stories they don’t want appearing as Sponsored Stories again, at least for the time being, seems to be a saving grace for Facebook. The other, more inclusive opt out would be a much bigger problem for the social network.
The opt out mechanism isn’t the only thing included in the settlement. Facebook will also have to amend its Statement of Rights and Responsibilities to say something like:
You give us permission to use your name, profile picture, content, and information in connection with commercial, sponsored, or related content (such as a brand you like) served or enhanced by us. This means, for example, that you permit a business or other entity to pay us to display your name an/or profile picture with your content or information. If you have selected a specific audience for your content of information, will will respect your choice when we use it.
So, it’s basically fleshing out what a Sponsored story really is in their Terms of Service. Facebook has never misled users in regards to what a Sponsored story is, but this puts it a little more front and center in the SRR. Facebook also agreed to update their Family Safety Center with more information on advertising.
Earlier this week, we told you how Facebook’s mobile advertising (which only consists of Sponsored Stories) was succeeding in terms of click-through rate – much more than other forms of advertising on the site. After the IPO fallout, analysts have been concerned with Facebook’s ability to monetize mobile – and allowing users to opt out of Sponsored Stories is obviously detrimental to Facebook’s plans in this area.
Check out the full settlement below, courtesy TechCrunch: