Last month Facebook settled the “Sponsored Stories” lawsuit brought on by 5 Facebook members and the total numbers have been disclosed this week. The lawsuit alleged that Facebook violated California’s laws by leveraging user photos, content and likelihood without consent.
The lawsuit was filed in San Jose, California and Judge Lucy Koh found that the plaintiffs had “shown economic injury could occur through Facebook’s use of their name, photographs and likenesses” according to Reuters. Facebook has agreed to pay $10 million to charity to settle the lawsuit. The settlement arrangement was a cy-pres settlement where the settlement funds can go to charity.
Sponsored Stories are nearly a “paid organic” advertisement that leverage word of mouth marketing along with a paid element. It was also reported in the lawsuit that Sponsored Stories were the “Holy Grail” of advertising.
Postscript, June 21, by Matt McGee: More details are emerging about the settlement of this lawsuit. Reuters is reporting that Facebook has agreed to give users more control over what content can be used for Sponsored Stories for at least the next two years. And, in addition to the $10 million charitable donation reported above, Facebook will also pay about $10 million more to cover the plaintiff’s attorneys’ fees.