making regulation meaningful

On 26 August 2013, a San Francisco judge approved a $20 million settlement between Facebook and those of its users whose information had been used in Facebook’s “sponsored stories” advertising campaign without their consent.    You remember “sponsored stories” – the program where a user hitting the “like” button was equated to a commercial endorsement, with the risk that the user’s photo and personal information might even appear in an ad.

The suit was filed in April 2011, alleging that Facebook had not adequately informed its users of the program nor given them an opportunity to opt-out of the program.  Although Facebook admits no wrong-doing, the settlement includes not only the $20 million payout but changes to the language of Facebook’s Terms of Use, the creation of a means for users to review the use of their information in sponsored stories advertising and to control ongoing use of that information.  The settlement also provides parental supervision and the opportunity to opt-out entirely for non-adult users.  Education programs will also be developed, notifying users of these new provisions and powers.


Although $20 million sounds like a substantial amount of money, it pales in comparison to the approximately $73 million the court estimates that Facebook earned from those sponsored stories ads that used the information in question. 

It should also be noted that the $20 million will be split among the class action attorneys, privacy organizations, and affected users.  Estimates range from 614,000 to 125 million affected users, resulting in individual payouts of no more than $15.  If every affected user applied for the funds, it would amount to 2 cents/user.  In approving the settlement, the judge acknowledged that the individuals would receive only a nominal amount, but indicated that they had failed to prove that they were "harmed in any meaningful way".

Meaningful?  Facebook’s business plan is predicated on collecting and commodifying the personal information of its users.  It does so successfully.  And when, after paying the settlement, they have still made $50+ million by violating fair information principles, this settlement shows itself not as “punishment” but rather merely as the cost of doing business. 

Users need meaningful protections, and that means that violations of the Terms of Use, of the Privacy Policy, or of fair information principles need to be understood as invasive violations and inherently damaging.  As long as infringing on informational self-determination is considered not to constitute meaningful harm, companies will be able to do so with virtual impunity.