Facebook pulled the plug on advertising initiative Beacon, settling a year-old class-action lawsuit charging that the social-networking service failed to provide adequate information and privacy controls to Beacon users, CNET reported.
Beacon will be completely shuttered, and Facebook established a $9.5 million “settlement fund” to set up an independent foundation to “fund projects and initiatives that promote the cause of online privacy, safety and security,” CNET reported.
The suit was filed in August 2008 on behalf of 20 plaintiffs, and it named Facebook and Beacon participants Blockbuster, Fandango, Overstock.com, STA Travel, Zappos, Hotwire and GameFly, according to CNET.
Facebook representative Barry Schnitt released a statement saying:
We look forward to the creation of the foundation and its work to educate Internet users on how best to control their privacy, engage in safe social-networking practices and, generally, enjoy themselves more online by having knowledge that gives them a greater sense of control. We fully expect the foundation to team up with other leading online-safety and privacy experts and organizations that have been working diligently in these fields.
We learned a great deal from the Beacon experience. For one, it underscored how critical it is to provide extensive user control over how information is shared. We also learned how to effectively communicate changes that we make to the user experience. The introduction of Facebook Connect—a product that gives users significant control over how they extend their Facebook identity on the Web and share experiences back to friends on Facebook—is an example of this.
And a company spokesman told Inside Facebook:
While we don’t admit any wrongdoing in this matter, we did want to get the episode behind us. And we were particularly interested in an agreement that creates a foundation that has value for all users, rather than just a few individuals.
Facebook’s description of how Beacon worked, from its Beacon FAQ page:
If you are logged in to Facebook and visit a Beacon affiliate, an action you take (like writing a review or purchasing an item) may trigger that Website to want to publish a story to Facebook. Before that happens, the Website will send some information to Facebook in order for Facebook to generate a notification that will display in the lower-right corner of your screen. If you click, “No, Thanks,” no stories or information will be published anywhere on Facebook. Any information that was sent to Facebook’s servers will be deleted. If you click “Close” or ignore the story, the story will be sent to Facebook, but not yet published.
The next time you visit your home page, you’ll see a message remind you that this story is being sent. There are three things you can do with this story: approve the story by clicking Okay, remove the story by clicking “Remove,” or ignore the entire message by doing nothing. If you approve the story and click “Okay,” the story will be published in your Wall and may appear in your friends’ News Feeds. If you remove the story using the “Remove” link next to it, the story will never appear in your Wall or a friend’s News Feed. If you ignore the whole message, it will go away after a few days and nothing will be published to Wall or News Feed. However, when you ignore a story, it remains queued, so that the next time you generate a Beacon story, this home page message will have two stories, instead of one.
Once this story has been published, it will appear in your Wall, and it may appear in the News Feeds of your friends.
You can control how Beacon interacts with your profile from the “Wall Permissions” tab of the Applications page.