After initially settling a class-action lawsuit regarding sponsored stories for $10 million, Facebook said it will make some changes and give users more control over how their personal information is used in the ad feature. These changes could deal a big hit to the social network’s pocketbook.
Reuters reports that the total loss to Facebook, once these changes are in place, could be far beyond the $10 million that was donated to charity (and the additional $10 million to cover the plaintiff’s attorney fees). An economist in the story says Facebook could lose about $103 million.
Facebook users will be able to control what content can be used for sponsored stories, according to the settlement. The social network agreed to keep these controls in place for at least two years.
In December, a group of five Facebook users filed a class-action lawsuit against the company over the use of their likenesses in sponsored stories — where companies can essentially buy prime real estate on news feeds. The users feel that sponsored stories violated California law by publicizing likes, without any way to opt out.
Reuters notes that the settlement still has to be approved by a U.S. District judge.
Readers: How do you feel about the way Facebook has rolled out sponsored stories?
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