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US court approves Facebook's 'sponsored stories'

A California judge on Monday gave preliminary approval to a revised settlement deal regarding Facebook's "Sponsored Stories" product.

After reviewing the evidence presented at a 15 November hearing, Judge Richard Seeborg gave the deal his blessing. "The court is satisfied that the revisions to the terms of the settlement are sufficient to warrant preliminary approval under the applicable standards," he wrote.

Facebook was sued last year over "Sponsored Stories," which turned users' "likes" into ads that appeared on the social network's newsfeed. The program, introduced in January 2011, let advertisers take word-of-mouth recommendations and promote them.

The lawsuit, however, said Facebook "improperly uses the names, photographs, likenesses, and identities of plaintiffs to generate substantial profits for Facebook." Basically, the suit argued that Facebook was using its members as unpaid spokespeople for its advertisers. The company wanted to make "Facebook members in the United States into their marketers, but without any compensation," the suit said.

The two sides reached a settlement over the summer, but Judge Seeborg rejected it because neither side adequately explained how they reached the figures outlined in their deal, which included $10 million (£6.2 million) for Internet privacy groups, up to $10 million (£6.2 million) for plaintiff attorney fees, and up to $300,000 ($186,000) in costs.

The revised settlement reportedly agreed to pay each victim $10 (£6.20) from a $20 million (£12.4 million) settlement fund. The update got the stamp of approval from Judge Seeborg.

"The settlement agreement appears to be the product of serious, informed, non-collusive negotiations and falls within the range of possible approval as fair, reasonable, and adequate," he wrote in his decision.

Any Facebook member who had their photo appear in a Facebook Sponsored Story is eligible to collect should the deal gain final approval. Those who might object to the revised deal now have several months to object. The court will hold a fairness hearing on 28 June, 2013, and if all goes well, the settlement will gain final approval.