,

Facebook’s Proposal Over Sponsored Stories Case Rejected By Judge

A district court judge strike Facebook’s proposed settlement over a case that reveals a user’s “Likes” of services and products to their friend’s at the social network. Facebook has been hit by a class-action lawsuit regarding its “Sponsored Stories” feature that publicizes a user’s Likes to their Facebook friends but does not pay the users themselves.

The San Francisco District Judge Richard Seeborg expressed his disapproval of the social network giant’s  settlement of the case by rejecting it yesterday. He said that he had “serious concerns” about it, and he’s still working how the amount to be paid out by Facebook be determined.

Facebook proposes a deal that would give its users more control over how their Likes will be displayed, including a feature that would give an option for those 18 year olds and below to opt out of Sponsored Stories. This ad feature displays–to a Facebook friend–a user’s picture, name, and tagline displaying that a person likes a certain brand or business. The ads initially appeared only at the page’s right columns, but soon moved to member news feeds as part of the “Sponsored Stories” program during January this year.

The proposed deal says that Facebook is required to pay a $10 million attorneys fee for the plaintiffs, and another $10 million donation to nonprofit groups like the Electronic Frontier Foundation, a group that specializes in protecting internet privacy.

Facebook also reveals tweaking its system to give a new user control over Sponsored Stories will cost the company about nearly $125 million dollars in advertising revenue. The revelation leaves Seeborg to wonder why Facebook is only paying $20 million to settle the issue if Sponsored Stories requires such a massive amount to modify.

According to a report by Wired, Seeborg suspects that the plaintiff attorneys “may have bargained away something of value to the class.” The judge is now seeking answers from the lawyers why no money is being given to Facebook users directly.

“We appreciate the court’s guidance and look forward to addressing the questions raised in the order,” a Facebook representative was quoted in a statement.

Based on an observation from wired, if the judge approved the proposal Facebook members in the United States would have sent a notice allowing them to join the case or not. Class members in the case could have objected to the terms too.