Facebook Beacon has poked its last

As part of the terms of a class action settlement against the ill-fated advertising experiment, Facebook will finally shut it down--and create a $9.5 million "settlement fund" to create an independent online privacy foundation.

Caroline McCarthy Former Staff writer, CNET News
Caroline McCarthy, a CNET News staff writer, is a downtown Manhattanite happily addicted to social-media tools and restaurant blogs. Her pre-CNET resume includes interning at an IT security firm and brewing cappuccinos.
Caroline McCarthy
3 min read

It's finally over for Beacon, the ill-fated advertising program that the social network initially launched with splashy Madison Avenue fanfare nearly two years ago.

The social network has settled a year-old class action lawsuit that targeted the social network's alleged failure to provide adequate information and privacy controls to users with regard to Beacon, which shared information about users' information on third-party partner sites in Facebook news feeds.

One of the terms of the settlement? Any last vestiges of Beacon, which failed to gain traction amid a barrage of negative press stemming largely from advocacy groups like MoveOn.org, will be shut down completely.

Also as part of the settlement, which is still pending approval from a judge, a $9.5 million "settlement fund" has been established to set up an independent foundation to "fund projects and initiatives that promote the cause of online privacy, safety, and security," according to a release. Up to a third of that fund, however, can potentially be recovered by the plaintiffs' lawyers.

"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," a statement from Facebook representative Barry Schnitt read. "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."

The suit was filed in August 2008 on behalf of 20 plaintiffs, most of whom were Texas residents. Named as defendants were Facebook, along with current and former Beacon participants Blockbuster, Fandango (owned by Comcast), Overstock.com, STA Travel, Zappos, Hotwire (owned by InterActiveCorp), and GameFly. Another, earlier Beacon-related lawsuit had been filed against Blockbuster several months earlier, claiming that its participation in the advertising program violated the Video Privacy Protection Act of 1987. Facebook was not named as a defendant in that suit.

Shortly after the negative buzz about Beacon started, Facebook began tweaking and modifying the program to allow more user control over the feature. But it was too late: advocacy groups claimed that it still wasn't enough, some existing partners pulled out, and others were likely deterred from participating because of the unsavory implications. Surprisingly, a "small number of customers" were still using it; Facebook will work to transition them out of it.

Facebook's experiments in social-media advertising turned instead to "engagement ads," which have come under some scrutiny themselves, and the "fan pages" that it encourages brands, organizations, and celebrities to create.

The irony behind Friday's news is that the thinking behind Beacon ultimately evolved into the phenomenally successful Facebook Connect, the universal log-in standard that, among other things, shares third-party activity on members' Facebook profiles.

The privacy controls on Connect are clearer and more extensive, but perhaps more crucial to Facebook Connect's success has been the fact that it's been marketed as a utility for ordinary members rather than an advertising tool for paying clients. It's free for third-party sites to implement, and with only a few exceptions, sites working with Facebook Connect code it in through the social network's application programming interface, or API, rather than ink a formal partnership.

And offering Facebook users the chance to register and log in to external sites without separate usernames and passwords gives Facebook Connect's marketing a slant of user convenience--and security, as some Web users may be more comfortable hitting a "Connect with Facebook" button than registering for an account with a new Web service.

"We learned a great deal from the Beacon experience," the statement from Facebook's Schnitt read. "For one, it underscored how critical it is to provide extensive user control over how information is shared. We also learned how to effectively communicate changes that we make to the user experience. The introduction of Facebook Connect--a product that gives users significant control over how they extend their Facebook identity on the Web and share experiences back to friends on Facebook--is an example of this."