Facebook's Beacon has been nothing but trouble since it launched in 2007, spurring numerous user complaints and a class-action privacy suit. The company has apparently learned its lesson, as it has now proposed a lawsuit settlement that involves shutting down Beacon and paying out $9.5 million to a settlement fund.
As quickly as it swooped into Facebook users' lives and revealed their secret purchasing habits to the world, Beacon has now been shut down as part of a lawsuit settlement. Facebook revealed late Friday that its controversial "advertising" feature would be shuttered, saying that the company had "learned a great deal from the experience." Facebook also plans to donate $9.5 million to an organization that fights for online privacy, though the settlement proposal still awaits approval by a judge.
Facebook's Director of Policy Communications Barry Schnitt said in a statement that the whole Beacon ordeal "underscored how critical it is to provide extensive user control over how information is shared." He said the company also learned how to communicate changes to users (you know, instead of just dumping things like Beacon on them without a peep), and that the introduction of Facebook Connect allows for much greater user control over how their Web antics get shared back to friends on Facebook.
"We look forward to the creation of the foundation and its work to educate Internet users on how best to control their privacy; engage in safe social networking practices; and, generally, enjoy themselves more online by having knowledge that gives them a greater sense of control," Schnitt said. "We fully expect the foundation to team with other leading online safety and privacy experts and organizations that have been working diligently in these fields."
Facebook first launched Beacon in November of 2007 as part of a new marketing strategy intended to benefit both advertisers and and Facebook users (more of the former than the latter). A number of companies signed up to be part of the program, meaning that any user activity that took place on their respective websites would be reported back to Facebook and published to users' timelines. Because Beacon was originally set up as an opt-out service instead of opt-in, many users were horrified to find their off-Facebook activities being published to their profiles automatically. Not only did users feel that their privacy was being violated, a number of users complained loudly that Beacon had ruined numerous surprise holiday gifts.
A few weeks after the initial backlash, Facebook founder Mark Zuckerberg posted an apology. He admitted that the company should have handled Beacon differently and said that the default settings had been changed so that publishing off-Facebook activities to users' news feeds would now be off. Instead, users could now opt in on a per-incident or per-site basis.
That didn't stop a class-action lawsuit from being filed in April 2008, alleging that Beacon and Blockbuster (one of Facebook's marketing partners) were in violation of numerous privacy laws by reporting user activity back to Facebook. The complaint said that off-Facebook activities were still being reported back to Facebook (even if users choose not to publish the info), and that Blockbuster's participation constituted a violation of the Video Privacy Protection Act—a law that prohibits video providers from allowing third parties to access identifiable information about someone's renting or buying habits without their express, written consent.
That lawsuit has been making its way through the court system for more than a year and Facebook apparently realized that it wasn't going to win anytime soon. As a result, the company decided to settle, proposing the $9.5 million settlement fund go towards the creation of an independent foundation that would "fund projects and initiatives that promote the cause of online privacy, safety, and security."
Despite Facebook's positively spun PR speak, it's clear that the company has learned a lesson from the calamity that was the Beacon experience. Everything about Beacon's rollout was done poorly, which then tainted the service forever despite Facebook's desperate attempt to right its wrongs. It took a major class-action lawsuit and the launch of an entirely new service (Facebook Connect) for the company to pull the plug on Beacon, but Facebook has learned the hard way that it earned its users by being conscious of privacy (at least compared to MySpace), and that it needs to continue giving users control if it wants to continue growing.
By Jacqui Cheng
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