Facebook Agrees To Settle ‘Sponsored Stories’ Lawsuit

Posted on May 23 2012 - 5:26am by Editorial Staff

The social giant has agreed to settle a lawsuit that alleged that the Facebook’s “Sponsored Stories” feature publicized users’ “likes” without actually compensating the users or providing users the ability to opt-out from it. The terms of the settlement have not been rolled out in court filings however asking for comment on the settlement, Facebook’s representative declined.

The story started last year when five Facebook members sued the social giant, over the “Sponsored Stories” feature violates their right to publicity under California law. A “Sponsored Story” is an ad that appears on a member’s Facebook page, and generally consists of another friend’s name, profile picture and an assertion that the person “likes” the advertiser.

The lawsuit featured comments from Chief Executive Mark Zuckerberg, stating that a trusted referral is the “Holy Grail” of advertising. In addition, the lawsuit cited comments from chief operating officer Sheryl Sandberg, saying that the value of a “Sponsored Story” advertisement is at least twice and up to three times the value of a standard Facebook.com ad without a friend endorsement.

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Editorial Staff at I2Mag is a team of subject experts led by Karan Chopra.