Let’s get legal: does Facebook owe you money?

Shayne C. Dunbaugh  Journal Staff

That’s correct — according to a recent email, some users may be party to reparations in a pending class action settlement against Facebook. The Action claims “Facebook unlawfully used over 150 million users’ names, pictures, likeness and identities in ‘featured article ad campaigns’ on its site.”

Facebook, Inc. – a company that is still in its tentative stages after launching its IPO just five quarters ago – outpaced its expected growth estimates last quarter wholly due to revenue generated from advertisement. As such, a proposed class action directly targeted at marketing couldn’t come at a worse time for this volatile industry, especially when facing off against advertising giants like Google and Microsoft’s Bing.

But how far does this violation actually go? According to the Facebook Settlement Page, claimants can file for reparations only up to $10! Further, if the number of claimants exceeds a payout deemed economically plausible according to Facebook’s numbers, Facebook will give the money to a charity that educates people on proper online advertising techniques.

Is this to say that Facebook has placed a cap on the social cost of using personal information for its own profits? Are companies really willing to use someone’s face and name for its own margins and then scrape out of finding the quantitative cost-per-click payout it rightfully owes to its constituents? It makes one wonder if Facebook did their homework before testing in the open market and begs the question: Do people really gain enough satisfaction from Facebook that they are willing to forfeit potential monetary gains and privacy rights violations?

Over the years Facebook has accepted the role of pilot in the Web 2.0 era – carrying us from its inception in 2004, to the present landmark of mobile use outpacing desktop use in a single quarter. Everyone agrees that Facebook has been a sensation, piggybacking on the advent of the “dot com boom,” but at some point reality has to kick in.

A little review of the stock’s performance is enough to knock out some of the hype and see where the stock settles, or worse, that no market exists at all. Facebook’s Initial Public Offering of $42.05 came just ten months ago on May 18, 2012. It closed the day down $3.82 to finish at $38.23. Although the stock did top out at a whopping $45 throughout the day’s trading, it continued to close at a steady decline until hitting its lowest of $26.82 in September. Currently, the stock has been trading in the $27-$29 range, but topped at $32.46 a month ago. The majority – and I do mean majority – of Facebook’s revenue came directly from revenue generated through advertisement.

Facebook employs a targeted marketing platform for firms, small businesses, and individuals to advertise to specific or non-specific demographics by employing advance data correlation techniques desirable to attract commerce. Options exist as to how these advertisements are portrayed and the advertiser is charged according to the campaign criteria selected. The case involved, Farley, et al vs. Facebook, is allowing any person featured in a “sponsored story ad campaign” prior to Dec. 3, 2012 to file a claim as party to receive a proportion of a single $20 million payout by May 2, 2013. This is where it gets interesting: If the settlement is approved, the court will enter a Final Order and Judgment, dismissing the case with prejudice, meaning that it cannot be filed again and remember if too many people file, Facebook will simply throw the money into a charity.

Let’s get serious: if Facebook admits that it featured an advertisement with a picture of someone and their name next to a company or product without their consent, and somebody clicked on that advertisement as a result, that person should be entitled to a portion of the money received by Facebook from the advertiser. But wouldn’t that ruin Facebook? I mean, if I am on someone’s page and there are advertisements on the sides of the screen, isn’t that the same thing?

I could be on any of the 644 million active websites comprising the webscape, or I could be utilizing my time shopping at the mall, but instead I am looking at pictures of family. If those pictures were available on a family website and there were advertisements, doesn’t the owner of the site receive the profits from clicks when someone is attracted to their site as a result of their individual unique creation?

In the same way, how can we ever hope to define the separation between a person’s name and their picture in such a way that person is not entitled to advertising profits for clicks while viewing their information? If this is the case, maybe Facebook doesn’t just owe you one check, maybe – according to our evolving democracy – Facebook owes you a check every month or every quarter for a portion of the profits due to clicks while someone was attracted to your site. Do you think this sort of change in the market will create a positive effect, evolving Web 2.0 into the next phase, whatever that may be? Could committing to put Constitutional rights first cause a modification of Facebook and the industry that could only result in improving real-world performance?

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