Facebook To Pay $20m Over 'Likes' Advertising

A judge has approved a deal in which Facebook will pay $20m (£13m) for using members "likes" as endorsements for advertisers.

The money is to be shared between lawyers, internet privacy rights groups and Facebook users who filed claims in the class-action lawsuit against the social media giant.

US district judge Richard Seeborg reasoned that the sum, a small fraction of the billions being sought in the case, was fair given the challenges of proving Facebook members were financially harmed or that signalling "likes" for products did not imply some form of consent.

Facebook's Sponsored Stories programme used members' names or likenesses to endorse ads without getting their permission, according to the legal filing.

Judge Seeborg estimated the size of the class represented in the suit as 150 million people, but noted that so few had filed claims that there was ample money in the settlement fund.

"The settlement as a whole provides fair, reasonable, and adequate relief to the class, in light of all the circumstances, including the low probability that a substantially better result would be obtained through continued litigation," the judge ruled.

The settlement calls for Facebook to modify its rules to give members greater control when it comes to how their information is used regarding Sponsored Stories.

"Sponsored Stories, in Facebook's view, does nothing more than take information users have already voluntarily disclosed to their "friends," and sometimes redisplays it to the same persons, in a column that also contains more traditional paid advertising," the judge wrote while detailing his decision.

"Plaintiffs faced a substantial burden in showing they were injured by the Sponsored Stories."

So few Facebook members have filed claims that those negotiating the settlement proposed paying out $15 to each person and having enough cash left over for lawyer fees and routing funds to internet privacy groups, according to the ruling.

An original settlement rejected by the judge recommended the same pool of money, but allocated none of it to Facebook members.

Facebook: Social Network Linked To Unhappiness

Facebook could be spreading unhappiness through society as well as keeping people connected, research has shown.

The number one social networking site is strongly associated with declines in well-being, psychologists claim.

Scientists found the more time people spent on Facebook over a two-week period, the worse they subsequently felt.

In contrast, talking to friends on the phone or meeting them in person led to greater levels of happiness.

Study leader Dr Ethan Kross, from the University of Michigan in the US, said: "On the surface, Facebook provides an invaluable resource for fulfilling the basic human need for social connection.

"But rather than enhance well-being, we found that Facebook use predicts the opposite result - it undermines it."

The researchers recruited 82 young adults, all of whom had smartphones and Facebook accounts.

To assess their personal levels of well-being, participants were sent questions by text message at five random times each day for two weeks.

The "experience sampling" technique is a recognised reliable way of measuring how people think, feel and behave in their day-to-day lives.

Participants were asked how they felt "right now", how worried or lonely they were, and to what extent they had been using Facebook or interacting with other people directly.

Writing in the online journal Public Library of Science ONE, the researchers said higher levels of Facebook use correlated with greater loss of well-being.

Volunteers were also asked to rate their level of life satisfaction at the start and end of the study.

Over the two-week period, satisfaction ratings were found to decline the more people used Facebook.

"This is a result of critical importance because it goes to the very heart of the influence that social networks may have on people's lives," said University of Michigan neuroscientist and co-author Dr John Jonides.

Facebook shares soar 25% on strong mobile ad earnings

Shares in Facebook jumped by more than 25% at the market opening on Thursday, after it beat profit forecasts with stronger than expected mobile ad sales.

On Wednesday, the social networking giant had reported profits of $333m (£217m) in the second quarter.

When trading began in New York, Facebook shares were 25.6% higher at $33.30, the highest since May 2012.

Facebook, which is the world's largest social networking company, floated on the Nasdaq at $38 a share last year.

Following the release of the latest results, at least 16 brokerages raised their price targets for the firm.

"Facebook has discovered the formula to begin significantly extracting value from its 1.16 billion global users," said JMP Securities analyst Ronald Josey.

Video ads

A year ago, Facebook had no mobile advertising and many analysts were sceptical about the firm's ability to make money in the arena.

Internet companies have been struggling with how to display adverts on smaller screens, as more people use their smartphones to access the web.

Facebook's revenue from smartphones and tablets made up almost half of total advertising revenue in the second quarter.

Facebook is widely expected to launch video ads soon

The company is widely expected to launch mobile video advertising in the fourth quarter.

"Facebook's massive audience should be irresistible to brand advertisers as the company preps to launch 15-second video ads, which could be Facebook's next billion-dollar business," said analysts at Jefferies & Co.

Meanwhile, analysts at Morgan Stanley expect video advertisements to boost Facebook's revenues by more than 10%.

In a statement, Facebook chief executive Mark Zuckerberg said: "The work we've done to make mobile the best Facebook experience is showing good results and provides us with a solid foundation for the future."

According to chief financial officer David Ebersman, 20 billion minutes a day were spent on Facebook in June.

"This quarter marks the end of our first year as a public company and I think we've created a good foundation for the future," said Mr Zuckerberg on a call to discuss the earnings.

Mobile boost

Facebook made $655.6m from mobile ads between April and June - more than 41% of the $1.6bn in overall advertising revenue, compared with 30% for the same period last year. The number of mobile users expanded 51% to 819 million.

"I'd say that Facebook is in a unique position with the ad market right now in that it is very far ahead of any other major ad platform in mobile display advertising," said Clark Fredricksen of research firm eMarketer.

The company has focused on perfecting its ad sales programmes. Last month, itannounced changes to its Ads Manager which it said would provide advertisers with better data.

In April, Facebook won back General Motors almost a year after the car company pulled advertising from the site.

Facebook vs Google

Analysts said Facebook's rival Google has fared less well in the mobile advertising market so far.

Last week, Google posted second-quarter results which fell short of Wall Street's expectations.

"The Facebook versus Google debate will return to the investment community, after a year-long hiatus," Stifel Nicolaus analyst Jordan Rohan said.