Facebook Forks Out $10M For Publicising “Likes”
Next to celebrity endorsements, it seems Facebook believed friends’ “likes” ranked a close second. It turns out to be a violation of privacy, according to a San Jose California federal court — and a very expensive attempt at cutting costs on celebrity endorsements, ironically. Facebook will donate $10 million (S$13M) to charity for appropriating people’s likenesses and names for FB’s advantage.
Five Facebook members took the social networking giant to court in a class-action suit, alleging the “Sponsored Stories” feature in FB violated California law by publishing users’ “Likes” without compensation and with no opt-out function. A sponsored story is an advertisement that appears on a user’s wall with his friend’s face and name on the endorsement, stating the friend “Likes” the advertiser.
The also lawsuit contained comments from Facebook CEO Sheryl Sandberg, saying the value of a ‘sponsored story’ advertisement would be two to three times more than a standard FB ad without a friend endorsement. Mark Zuckerberg agrees wholeheartedly, saying trusted advertisements are the “Holy Grail” of marketing.
Facebook settled the case out of court last month — curtailing billions of potential losses in a class-action lawsuit affecting one in three Americans, but the news broke out this weekend. FB and the complainants opted for the “cy-pres” settlement, which means the $10 million can go to charity after the lawyers take their 25%. It is not known if the plaintiffs will be taking home any cash.
The social network behemoth’s not-so-stellar IPO and rocky road to a current stock price of $30 belies its true strength: sustaining and growing its user base (900 million) with their love of games and networking.