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Facebook shuts Beacon advertising program that shares info on online shopping

Facebook said yesterday it’s ending its controversial advertising program called Beacon in which the social media company shared online purchases with user’s network of friends.

The announcement
was part of a proposed settlement to a class action suit filed in 2007 against Facebook by users who said the service violated their privacy. In its proposed settlement, Facebook said it would set up a $9.5 million fund for a non-profit foundation that will support online safety and privacy.

Post colleague Ellen Nakashima, wrote about the program in 2007 and described Beacon as “a core element of Facebook's attempt to parlay the personal and behavioral information it collects about its members into a more sophisticated advertising business, an effort to turn a user's preferences into an endorsement with commercial value.”

How did it work? If you bought a movie ticket on Fandango, for example, that purchase would be collected for behavioral advertising unless a user opted out of that program. That information would also be broadcast to a user’s friends on the social networking site.

On its page describing the class action suit, Facebook explains how that business idea sat poorly with users.

“The Plaintiffs in this lawsuit are claiming that they did not receive adequate notice and/or choice about how Facebook and its affiliates used Beacon to collect information about their web-browsing activity before it was sent to Facebook for publication.”

The company said it denies accusations in the Web suit and said the court will review the proposed settlement next February. The defendants in this lawsuit are Facebook, Inc., Blockbuster, Inc., Fandango, Inc., Hotwire, Inc., STA Travel, Inc., Overstock.Com, Inc.,, Inc., and Gamefly, Inc.

Facebook denies any and all liability for the claims alleged in this lawsuit. The court has not decided in the favor of the class or Facebook and the other defendants at this time.

By Cecilia Kang  |  December 9, 2009; 10:00 AM ET
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