Facebook must let users opt out of Sponsored Stories following lawsuit settlement

Facebook will have to give users more control over which of their actions can be promoted in Sponsored Stories, as part of a settlement for a suit claiming the social network violated California law by using people’s names and images along with advertisements without compensating them.

The change could have a negative impact on Facebook’s advertising business, which increasingly relies on Sponsored Stories over traditional ads that do not include social context of what a user’s friends Like. Sponsored Stories have higher clickthrough rates than other ads on Facebook, especially when they are displayed in News Feed or on mobile devices.

The suit was settled last month, but terms weren’t disclosed until today. According to court documents obtained by TechCrunch, Facebook agreed to create a way for users to view which of their interactions have been displayed in Sponsored Stories and take action to opt out of these being shown further. Despite this concession, the company’s lawyers succeeded in preventing more drastic requirements, such as allowing users to be opt out of Sponsored Stories preemptively.

Since 2010, Facebook has allowed users to completely opt out of having their social actions paired with non-Sponsored Stories ads, as seen below. This setting does not have an impact on Sponsored Stories, however, as they simply promote a user’s actions and do not connect them with ads where advertisers have control over the headline and body copy. TechCrunch’s Josh Constine explains, “For example, I like Automobile Brand X. I can opt out of being shown beside an ad that says ‘Buy Automobile Brand X’s new gas-guzzling EvilMobile’ because I never saw that ad creative. But I can’t opt out of a Sponsored Story that merely says ‘Josh Likes Automobile X’ because I did.”

There are a number of ways Facebook could implement a mechanism for viewing and editing which of their activity has been used in Sponsored Stories. Though the settlement stipulates that the mechanism be “easily accessible,” Facebook will probably not want to make this setting too obvious and sabotage opportunities for advertisers. The company could create a new section under Account Settings that is similar to the App Settings page where users can view all the apps they’ve added and adjust which permissions they’ve granted the app. Facebook might also decide to integrate the option into Activity Log somehow.

Additional settlement terms require Facebook to revise its Statement of Rights and Responsibilities to make it clearer that users give Facebook permission to use their name and likeness in Sponsored Stories. Parents will have the option to prevent their children under 18 from being used in Sponsored Stories, and Facebook will have to add sections to its Family Safety Center to explain how parents can do this.