Social notworking site Facebook has paid $10 million to charity to settle a lawsuit that accused the site of violating users' rights to control the use of their own names, photographs and likenesses.
The lawsuit, brought by five Facebook members, alleged the social networking site violated California law by publicising users' "likes" of advertisers on its "Sponsored Stories" feature without paying them or giving them a way to opt out. When a "Sponsored Story" appeared on a member's Facebook page it contained another friend's name, profile picture and a claim that the person "likes" the advertiser.
In the lawsuit, Facebook Chief Executive Mark Zuckerberg was quoted as saying that a trusted referral was the "Holy Grail" of advertising. Facebook chief operating officer Sheryl Sandberg, was also quoted as saying that the value of a "Sponsored Story" advertisement was at least twice and up to three times the value of a standard Facebook.com ad without a friend endorsement.
It was going badly for Facebook when US District Judge Lucy Koh commented that the plaintiffs had shown economic injury could occur through Facebook's use of their names, photographs and likenesses. The settlement arrangement is known as a cy-pres settlement, meaning the settlement funds can go to charity.