Facebook could lose millions in lawsuit over Sponsored Stories

Facebook's 'Sponsored Stories' concept has been one advertiser's could definitely fall in love with. The concept meant that your face and status update could be displayed with their product on Facebook's sidebar, should they be linked in some way. Obviously this was doing the advertiser's job of adding a human element for them, and therefore, it meant that people could be more receptive to the content being thrown at them on the right-hand side of their Facebook. Then the lawsuits came (we haven't seen this before!), and Facebook could have lost up to $10,000,000 over users disputing the usage of their details in advertising.

Except it didn't. They probably would have been happy enough with losing $10,000,000. They have to pay out $10.3 million to the class-action lawyers alone, and then some more into a fund for the "recognized leaders in the fields of online advertising, privacy and safety". Then they have to give their American userbase the choice to opt out of Sponsored Stories; all 153 million of them. Economist Fernando Torres - not to be confused with El Niño Fernando Torres - predicts that the company could lose more than $103 million in the coming two years. The numbers he had access to were given under special access alone, and were redacted from publicly available documents.

If Torres is accurate about the losses then Facebook is set to lose more than one hundred and twenty million dollars in the coming two years. 

Happy Valentine's to you too, mate.

Users will now be able to decide for themselves whether they want to enter into stories or not, but also they will be able to see what stories they might already be part of. For all you know you could be a lubricant salesperson without even knowing it. Be careful what you Like, because advertisers might like it and promote your comment as well. The victory in the lawsuit should doubtless please those who might not have been too fond of the past 18 months with the site, questioning how safe their data with the service may have been.

We previously covered Facebook's Sponsored Stories problem a few days ago, though it seems now that their issue will go deeper than contributing some money to charity in response. With the frequency of lawsuits being brought against Facebook, it is no surprise to find that the company is forced to continually do more to fight against them. The contribution to charity, while noble, does not appear to have been sufficient to settle the matter with the claimants. Facebook had no response at the time the documents were made public and they still do not. It is entirely possible they will choose to remain silent about the issue for the future, since the potential loss of money is likely aggravating.

Source: Forbes

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16 Comments

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I actually thought some of these sponsored stores were good. I have a friend that develops android games and when he published links of his games, Amazon.com sponsored them so i saw advertisements for his specific games - that's almost genius. BUT, i am glad they will allow people to opt out. Quite frankly, if i +like a product or +like a brand and i link to an item, i don't mind if the sponsor pays to advertise that - i'm sort of recommending them anyway, so whats the big deal?

ozyborn said,
What ads? What stories?? I use Firefox and Chrome and block all of the crap....

be careful with comments like that around here or the moderators will scold you
for bragging about blocking ad's.. i know i got one from Neowin Staff bitching at me.
And all i said was i didn't know there WAS ad's because i never seen them before.
(because i use FF with adblock+ etc)

What kind of retarded douche clicks on ad's to buy crap anyway ?
weird people jeez

Fayker said,
Social Networks, have a lifespan of 5 years more or less, FB is now "old" ... too much old...

I'm curious, where did you get that data? Social Networks are actually quite new and in reality, there has only been two major ones (MySpace & Facebook). Since Facebook is still running strong, I don't think you can come to a conclusion that Social Networks only last 5 years.

Also, Facebook has been around 8 years, so that throws off the 5 year idea just with that company.

DRock said,

I'm curious, where did you get that data? Social Networks are actually quite new and in reality, there has only been two major ones (MySpace & Facebook). Since Facebook is still running strong, I don't think you can come to a conclusion that Social Networks only last 5 years.

Also, Facebook has been around 8 years, so that throws off the 5 year idea just with that company.

yea but many of those years it was only open to college students

the420kid said,

yea but many of those years it was only open to college students

Started in 2004 for college students only and became open for everyone in 2006.

I'm becoming more convinced that there will be space for a Facebook replacement in the near future as FB is being commercialized beyond the acceptable saturation point.

Dot Matrix said,
They are not having a good yer, are they? I wish Zuck would quit trying to mimic Google, and go back to Facebook's roots.

No they are not. And I think this is the least of their problems honestly with the stock scandal...

M_Lyons10 said,

No they are not. And I think this is the least of their problems honestly with the stock scandal...

Indeed. I do not have a FB account but the idea that your face can be associated with whatever advertisers decide to to is just preposterous...... IMO all these kind of programs, and I do not mean FB only, should be Opt-in and not Opt-out.
Granted with our "People representatives" acting as puppets of special interests there is no hope to see such behaviours sanctioned or regulated. Just check what happened to MS, MS not you, me or Joe Smith, when they enable/ tried to enable "Do not track" by default........

bdsams said,
I'm becoming more convinced that there will be space for a Facebook replacement in the near future as FB is being commercialized beyond the acceptable saturation point.

Diaspora is on it's way!