Khan Shing
Class Action Over Facebook Sponsored Stories Proceeds
Late last year, Facebook rolled out its “Sponsored Story” ad program. Among the online marketing community, this was probably the most anticipated Facebook product release of the past year. The gist of it is that anytime you post something about, or Like, a product, brand, event, etc. of a an advertiser, that post might get redisplayed on your outgoing feed as a Sponsored Story, with the advertiser’s brand prominently displayed. COO Sheryl Sandberg has described this as an important innovation in display ads, since people are far more likely to buy products from brands their friends recommend. Insiders at Facebook, as well as many outside analysts, also think this will be a critical part of the company’s efforts at increasing its share of the online display ad market.
However, Sponsored Stories also led to class action lawsuits being filed on behalf of Facebook users, alleging various privacy, misappropriation, and unfair business practices claims. As discussed here, http://goo.gl/hWUJR, a district court in California allowed one of these cases to move forward. In previous cases, Facebook has made arguments that they have commercial free speech rights in their targeted ad programs and they will likely make similar arguments here. While Sponsored Stories is certainly a clever way for Facebook to profit from the massive, and to this point largely free, marketing campaigns being waged all over the social network, it is equally clear the ad program has great potential to cause mischief. Since Facebook does not allow users to opt out of the program, anyone can accidentally become a virtual pitchman for a product based on a post that is taken out of context or, as is often the case, made ironically. Case in point: http://goo.gl/1qjDL