Into this fray steps litigation, often in the form of consumer class action lawsuits. One of the most high-profile targets is Facebook, with its $3.8 billion in 2011 revenue and recent IPO that created paper millionaires overnight.
Facebook faces multiple lawsuits over its consumer data collection habits. Let’s briefly explore a couple of examples.
First up is ongoing litigation in California courts over Facebook’s use of the “Like” button. (See Robyn Cohen v. Facebook, Inc., 2011 WL 5117164 (N.D. Cal. October 27, 2011; and Fraley v. Facebook, Inc., 2011 WL 6303898 (N.D. Cal. Dec. 16, 2011).) The social marketing research group Webtrends reported last year that Facebook suffered from horrifically low click-through rates. Given that its primary revenue source is advertising, Facebook looked for ways to improve that. Facebook CEO Mark Zuckerburg insisted that use of the “Like” button was key to this strategy because “a trusted referral is the Holy Grail of advertising.” Litigants have argued in recent litigation, however, that Facebook is using a person’s “Likes” to advertise to friends without members’ permission, which violates the intellectual property right of publicity.
Second, Facebook is now fending off a class action lawsuit addressing the use of its tracking “cookies.” A California court has agreed to consolidate and transfer several nationwide lawsuits into a single case that accuses Facebook of violating, among other things, the Federal Wiretap Act,18 U.S.C. § 2511, the Stored Electronic Communication Act (SECA),18 U.S.C. § 2701, and the Federal Computer Fraud and Abuse Act (FCFAA),18 U.S.C. § 2701, by installing cookies that track users even after users log out of Facebook. The suit alleges, for example, that intercepting cookies falls under the Wiretap Act’s prohibition of willful interception of electronic communications without permission. The suit also alleges that Facebook’s access of users’ computers for interstate commerce or communication violates the FCFAA.
By Will O’Neill