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SPOTLIGHT
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Published on -6/19/2012, 9:02 AM

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The world's pre-eminent social Internet site has received a slap in the Facebook. A $10 million slap.

That is the amount agreed to in a settlement between Facebook and a group of users who did not appreciate the company selling records of their activity on the site.

Facebook's "Sponsored Stories" feature would automatically record any user who hit the "like" button on any brand, then send notices to that user's friends that the person "likes" the advertiser. Such trusted referals are the "Holy Grail" of advertising potential, according to Facebook CEO Mark Zuckerberg. The Sponsored Stories basically allows Facebook to sell anything you "Like," "Post" or "Check-In" to marketers. Those referals then show up as ads on the timelines of your friends, along with your endoresement.

A handful of Facebook users in California filed a lawsuit, claiming the company used their names and images for commercial activity. The plaintiffs held they were not compensated for the ads, nor were they given an opt-out option.

By settling, Facebook will not face a potentially extremely expensive class-action lawsuit. With more than 150 million U.S. users, were damages to be found, fines could have soared into the tens if not hundreds of billions of dollars.

So, the company got off rather inexpensively. And the $10 million will not go to the plaintiffs. Instead, it will go to charity.

The other significant result of the settlement is that Facebook is free to continue the Sponsored Stories feature. It will need to explain itself a little more clearly, but basically any user should count on their activity potentially being monetized by Facebook. We've mentioned before that the company doesn't produce many tangible products other than games. What it has to sell is whatever users decide to post. Since going public, they're under even more pressure to turn profits on America's online lives.

Will the company pull it off? It depends on how gullible the public chooses to be. Thus far, Facebook has been able to count on the fact most people don't give a second thought to "liking" something. Instead, the action allows friends to see the user is active.

In the settlement ruling, the mediator pointed out other options if users were bothered by Facebook making money off of their likeness. Mediator Edward A. Infante said users could use pseudonyms or post profile photos that aren't actually of the user. Additionally, Infante said users do not have to "like" anything. Or even use Facebook.

It certainly is up to the individual whether Facebook continues to make real money on their online postings.

Editorial by Patrick Lowry

plowry@dailynews.net

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