Facebook Settles Beacon Case: No More Beacon, But There’s a $9.5M “Privacy Fund”

By Eric Eldon Comment

Facebook tried to create a new form of advertising in 2007 with the launch of Beacon. In conjunction with a number of big-name brands, Beacon automatically tracked Facebook users’ actions on other sites, then displayed that information to their friends back on Facebook. The program is now officially dead.

A class-action lawsuit filed in 2008 has been settled today. There are two parts. One is that Beacon, as it has been, will be fully shut down — only a few accounts are still open and those will be closed. The other part is that Facebook will, from our understanding, fund an independent foundation to the tune of $9.5 million. The foundation will itself fund projects and initiatives that promote privacy, safety, and security causes.

The case was settled, not lost by Facebook. Here’s what a company spokesperson told me when I asked for more detail:

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.

The settlement has not yet been approved by the judge, and the case was just filed. It took place in the Northern District of California part of the US District Court, San Jose Division. We’ll update with a link to the settlement when it becomes available.

The original filing described some elements of Beacon that were particularly troublesome to the plaintiffs, per the original lawsuit. From that filing, via Justia:

Plaintiffs alleged that Defendant Facebook, Inc. and Defendants Facebook Beacon Activated Affiliates (i.e., Blockbuster, Inc., Fandango, Inc., Hotwire, Inc., STA Travel, Inc., Overstock.com, Inc., Zappos.com, Inc. and Gamefly, Inc.) violated their privacy.

More on the original lawsuit, via CNET:

If the user was not a member (of Facebook), Facebook still obtained the notification from the Facebook Beacon Activated Affiliate. Information regarding user activities was sent in real time to a third party Web site–one which was not open or active in the user’s browser, and one which, in many cases, the user may never even have visited or heard of.

Facebook’s side of the story is that the company made a number of adjustments to Beacon in the weeks and months following the launch that met many user demands. This case was filed long after much of the outcry about Beacon had ebbed.

Future plans

I asked about the impact of this ruling on Facebook’s current efforts to share data with third-parties, including Facebook Connect. Here was the response.

Beacon was about our users’ actions on third-party sites. Facebook Connect is about using Facebook infrastructure to give users significant control over how they extend their Facebook identity on the web, and share their experience back to friends on Facebook

More statements, these from Barry Schnitt, Facebook’s Director of Policy Communications.

We learned a great deal from the Beacon experience. For one, it was 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. 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 with other leading online safety and privacy experts and organizations that have been working diligently in these fields.