To Settle Lawsuit, Facebook Alters Policy for Its Like Button
By SOMINI SENGUPTA June 21, 2012
SAN FRANCISCO - Complicating its efforts to accelerate advertising revenue, Facebook has agreed to make it clear to users that when they click to like a product on Facebook, their names and photos can be used to plug the product. They will also be given a chance to decline the opportunity to be unpaid endorsers.
The changes are part of a settlement for a class-action lawsuit against Facebook in Federal District Court in California. The agreement compels the company to change one of its most effective advertising tools, known as Sponsored Stories.
According to the agreement, filed Wednesday with the court in San Jose, Facebook users will be able to control and see which of their actions on Facebook are used to generate advertisements seen by their Facebook friends. For Facebook users under 18, there is an additional requirement: the company must give parents the opportunity to keep their children out of advertisements.
The settlement does not inhibit the company from using Sponsored Stories, which Facebook executives have repeatedly described as the most effective form of advertising in part because they do not seem like traditional advertisements. Both on the Web and on a mobile device, a Sponsored Story features the name and picture of a Facebook friend who has clicked on the like button for a product or organization.
This is exactly why Sponsored Stories can be bewildering, or off-putting, to some users. Until now, Facebook users were unaware when and how they were exploited for advertising, and they may not have realized that a click on something as vague as a like button could be used to enrich Facebook, the company.