If you’re a member of Facebook, you probably got an email recently informing you of a settlement regarding the Facebook Beacon system. Beacon was a technology that learned a lot about how you used the web, and could share that information with third-parties who could target you with offers based on what you like (for example, Netflix could pitch you on particular types of movies).
Beacon quickly became a rather disastrous public-relations nightmare for Facebook; they also ended-up getting sued for it. There’s a good lesson here for every startup: be very careful of how you treat customer data.
If you are interested in information on the lawsuit, you can find it on the settlement website. In summary, Facebook will pay $9,500,000 which will get put into a charitable foundation (a tiny amount, $41,500, will go to the group of plaintiffs who brought the lawsuit). The purpose of the foundation will be to “promote the cause of online privacy, safety, and security.” Sounds like a good cause to me, although I think the Electronic Frontier Foundation already does a good job of that. Perhaps the foundation will be able to fund some of the EFF. In addition the funds will be used to pay for the foundations expenses and legal costs.
Often, the legal bill has a nasty habit of chewing up a big chunk (or all) of such settlements. So I decided to ask the lawyers how much of the $9.5MM would go to legal fees. Here’s what they told me:
The vast majority of the funds will go directly to the foundation. Our current estimate is that the costs will be several hundred thousand, the legal fees will be no more than a third (but are likely to be closer to 25%) and that the balance of the funds will go to the foundation.
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