Facebook to alter 'Like' button policy as part of settlement

Facebook recently stated that it would inform users that their names and photos can be used to promote products whenever they click to 'Like' a product. As per a report by The New York Times, users will also be given a chance to decline the opportunity to be unpaid endorsers. The company will also offer settings that let users control which of their actions — which individual like, listen, or read — will appear in Sponsored Stories. The changes are to be made within the next six months.

The report reads, “The changes are part of a settlement for a class-action lawsuit against Facebook in Federal District Court in California. The agreement forces the company to change one of its most effective advertising tools, known as Sponsored Stories.” As per the agreement, 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.

Facebook will, however, still be using Sponsored Stories for advertisements as the settlement does not limit them from doing so. The report states that Facebook executives have repeatedly described Sponsored Stories as the most effective form of advertising 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.

The company will amend its terms of use to explain that users give the company permission to use their name, profile picture and content. “This means for example that you permit a business or other entity to pay us to display your name and/or profile picture with your content or information,” the court document reads.

The report added that an economist hired by the plaintiffs’ lawyers, Fernando Torres, testified that giving users such a choice could cost Facebook $103 million in advertising revenue.

According to the settlement, Facebook agreed to donate $10 million to non-profit organizations, including Consumers Union, the Electronic Frontier Foundation and several law school programs that specialize in privacy. The company also agreed to pay $10 million in plaintiffs’ legal fees.