Lights Out for Beacon But There's Light in the Tunnel

This week Facebook  settled a class-action lawsuit against the it’s advertising product, Beacon, agreeing to shut it down completely. Facebook will establish a $9.5 million “settlement fund” to fund initiatives related to online privacy.

Beacon arrived on the Facebook scene in November of 2007. Beacon posts updates to your Facebook profile when you interact with its partner sites. It was supposed to revolutionize the internet ad industry. Many came out  against Beacon,  claiming  that data was being forwarded to facebook without the users’  permission.

According to Pete Cashmore on Mashable

The situation worsened after a report claimed that Beacon was collecting data from partner sites regardless of whether users were Facebook members; amid the bad press, partner sites got cold feet. One partner, Blockbuster, was sued in April 2008 over its Beacon participation. The class-action suit against Facebook followed in August 2008.

The lawsut basically claims that

1.Facebook gathered information about users’ online transactions with affiliates and posted it without the express knowledge of the user.

2.Even though Beacon was essentially an opt out program, it was so difficult to do so because users would have to visit all 44 of the affiliates to do so.

3.Facebook was collecting information from transactions with the sffiliates of even non-facebook users.

A  settlement is pending approval in the U.S. District Court of the Northern District of California, after which Beacon will be closed. The Beacon may have been dimmed but Facebook has launched a bright new ad program,Connect which is considered a successful opt-in system that allows users  post web activity to their Facebook stream.