Facebook “Sponsored Stories”: An Ongoing Privacy Issue

By: Hannah Kleiner and Chris Mangelli

Ten years ago this month, Mark Zuckerberg launched what would become one of the most widely used social media sites on the web: Facebook[1].  Now, a decade later, Facebook boasts over 1.2 billion users[2] – equating to the entire population of India[3], which is no small feat.  However, despite its decade of success, Facebook has been dealing with an issue that has resurfaced time and time again since its inception.  This issue is one of privacy, which users claim has most recently been violated through the “Sponsored Stories” program.

After a Facebook user “likes” a particular brand or product, a “Sponsored Story” manifests itself in the form of an advertisement appearing in their friends’ newsfeeds[4].  The advertisement displays the brand or product as well as the user’s name, profile picture, and a statement confirming that this person “likes” what is being advertised.

Recently, users have been expressing their less-than-supportive opinions of this program.  Where Facebook has been making big bucks (nearly $234 million between January 2011 and August 2012)[5] on selling user data to advertisers, many of these users reportedly felt that their privacy had been violated and their personal information exploited.  As a result, plaintiffs filed a class action against Facebook on the basis that this social media site unlawfully used their information to advertise brands and products via “Sponsored Stories” without prior permission.  A $20 million settlement was approved on August 26, 2012, which was accompanied by Facebook’s agreement to alter its Terms of Use in an effort to make user consent to participation in “Sponsored Stories” more obvious and controllable.[6]

While many users agreed that this was a step in the right direction, others felt that it entirely overlooked the issue of children’s privacy.  According to Scott Michelman, a lawyer at the Public Citizen[7] group, “class-action settlements are supposed to compensate people for wrongdoing and deter the defendant from engaging in the bad behavior in future.  This settlement does neither,”[8] as no part of it attempts to deter Facebook from using minors’ data for advertising purposes.

For that reason, the Public Citizen group has been making strides in the last week to shed light on this unresolved issue.  They have claimed that the recent settlement is in direct violation of seven states by failing to obtain permission from parents to use their children’s personal information in advertising activities.  Michelman, who is handling the case, explains that “the default should be that a minor’s image should not be used for advertising unless the parent opts in.  Putting the burden on the parent to opt the child out gets it exactly backward.”[9]  This claim is included in the group’s legal brief to be filed with the Ninth Circuit Court of Appeals in San Francisco.

Jodi Seth, a Facebook spokesperson, made an effort to offset the Public Citizen group’s claims by reminding the general public that “the court-approved settlement provides substantial benefits to everyone on Facebook, including teens and their parents, and goes beyond what any other company has done to provide consumers visibility into and control over their information in advertising.”[10]

While Facebook remains consistent in their claims of providing users with the tools necessary to keep their information private, a recent study by Carnegie Mellon University (CMU) suggests otherwise[11].  After observing the evolution of Facebook privacy disclosures over seven years, CMU researchers discovered that there is an inverse relationship between information that users share publicly and privately.  While Facebook users are becoming increasingly guarded with what they share publicly, they have simultaneously become more open with what they share in their circle of friends.  However, contrary to what users may think, this seemingly internal information that they are sharing is still subject to visibility by Facebook and, consequently, advertisers.

Alessandro Acquisti, co-author of CMU’s study, concludes that “there is currently an intense debate in research and policy circles on the role of the individual decision making versus regulations in the area of privacy…the issue is whether market forces and notice and consent approaches are sufficient to achieving satisfactory levels of privacy protection.”[12]

After having been under considerable pressure from the public, Facebook users are relieved to hear that the “Sponsored Stories” program will officially be cancelled on April 9.[13]  In spite of this, the social media giant made it known that user data is still eligible for use in advertising efforts.  “Social context – stories about social actions your friends have taken, such as liking a page or checking in to a restaurant – is now eligible to appear next to all ads shown to friends on Facebook.”  If history repeats itself, then Facebook is believed to be setting itself up for an all-too-similar privacy issue.  Only time – and its users’ reactions – will tell.