Charities net $10 million from Facebook in privacy settlement

Facebook’s agreed to pay $10 million to charity as part of a settlement over its Sponsored Stories sidebar.

Sponsored Stories display a user’s name and picture alongside the assertion that he or she ‘likes’ a particular advertiser. While they intially appeared in a sidebar, they were moved into users’ news feeds at the beginning of this year.

However, the company was promptly sued by five people on the grounds that the company hadn’t sought their permission first. Facebook unsuccessfully attempted to have the lawsuit dismissed on the grounds that Sponsored Stories weren’t advertising, but news.

The case was settled earlier this month, but details of compensation weren’t released until now. The plaintiffs themselves will get nothing under what’s known as a cy-pres settlement.

“California has long recognized a right to protect one’s name and likeness against appropriation by others for their advantage,” wrote Northern District of california Judge Lucy Koh in her decision, seen by Reuters. She said that the plaintiffs had successfully demonstrated that they were liable to economic injury because of the feature.

If it had gone ahead as a class action lawsuit, says Reuters, the case could have involved as many as one in three Americans with damages potentially running into the billions. While similar cases have previously been thrown out, the settlement may encourage others to have a go.

The decision highlights the problems Facebook’s having in making advertising lucrative enough. During the case, chief operating officer Sheryl Sandberg said the value of a Sponsored Story was as much as three times that of a standard Facebook ad without the friend endorsement.