Facebook settlement update: Users get to opt-out of Sponsored Stories

June 21, 2012

$ Facebook LogoEarlier this week, a lawsuit against Facebook over the social networking giant’s unauthorized use of its members’ names and photos to advertise products was settled for $10 million.

I wrote a post about it on Tuesday, predicting that Facebook would need to do one of two things to avoid another such lawsuit.

One, Facebook could force its users to consent to letting the site use their names and pictures in ads as a condition to continue using Facebook.

Two, Facebook could offer users an option in their privacy settings allowing them to “opt-out” of being featured in a “Sponsored Story.”

According to the proposed settlement submitted to the court on Wednesday, it’s thankfully going to be the latter.

Under the terms of the proposed settlement, Facebook has to maintain this feature for two years.

I mentioned in my last post on this topic that such a move, though better for public relations, will make a serious dent in Facebook’s wallet because – let’s face it – many users will choose to opt-out.

How much of a dent?

According to the attorneys for the plaintiffs, “the changes to Sponsored Stories are worth $103.2 million, based on an economist’s analysis of the revenue each ad brings to Facebook.”

So, all you Facebook users out there worried that you may have tried selling condoms to your mother without your knowledge or consent: take heart.

Soon, you’ll only have to peddle such wares on Facebook if you really want to.