Facebook’s sad summer continues with a $650 million settlement

Facebook has agreed to pay $650 million to settle a years-long class action lawsuit over its use of facial recognition in what continues to be a less-than-great summer for the social media company.

The lawsuit is over Facebook’s photo-tagging feature, which used facial recognition software to identify faces in users’ photos. The state of Illinois, however, has a law against businesses collecting biometric data — which includes facial recognition — without first obtaining consent. Illinois argued that Facebook didn’t get that consent before enabling the new feature by default to its millions of Illinois users, and sued the company in 2015.

Facebook has denied it did anything wrong, but it tried to settle the suit for $550 million in January. That offer was rejected by a judge for not being enough; as NPR reported, the $550 million figure would result in payouts of just $150 to $300 per person. Facebook could have been on the hook for $47 billion if it lost the suit and affected users got the full payout of $5,000 per person allowed by the law.

“It’s $550 million,” the judge said in a June 4 hearing, according to court documents obtained by Recode. “That’s a lot. But the question is, is it really a lot?”

He continued, “That is a significant reduction from the $1,000 that the Illinois legislature set as the baseline. ... The Illinois legislature set this privacy expectation and privacy right as a serious one, and they put a high price tag on it for that reason.”

So Facebook has now added an additional $100 million to its proposal. According to court documents, that will net each affected user $200 to $400 each. The settlement was agreed to by both sides of the suit but has yet to be approved by a judge.

As it did back in January, Facebook told Recode, “We are focused on settling as it is in the best interest of our community and our shareholders to move past this matter.”

The new settlement comes as facial recognition software is more controversial than ever. IBM, Microsoft, and Amazon are all pausing or limiting law enforcement’s access to their technology in response to anti-police protests, and the New York Times recently reported on the first known false arrest based on facial recognition. At the same time, private companies are increasingly turning to facial recognition software, using it in photo-tagging services (like the aforementioned Facebook) or identity verification to unlock devices (like Apple’s iPhone). There’s also proposed bicameral legislation from Democrats that would ban the use of facial recognition technology by federal law enforcement and withhold federal funding from state and local agencies that don’t enact similar bans.

It also comes as Facebook weathers a summer that probably didn’t go as well as it once hoped. The company faces an antitrust investigation from Congress (along with Amazon, Apple, and Google), and CEO Mark Zuckerberg will be testifying before the House Judiciary Antitrust Subcommittee on July 27.

In June, Facebook’s own employees protested the company’s decision not to take action on posts from President Trump that threatened to respond to protests with gunfire, saying “when the looting starts, the shooting starts.” That incident led to civil rights groups calling for an ad boycott from many major companies over its perceived inability (or lack of desire) to stop hateful content that proliferates on its platform. And, a few weeks ago, Facebook released the results of a civil rights audit — which it largely failed.

Facebook has tried with varying success to respond to these controversies. The company cracked down on some Trump content, for instance, by removing campaign ads that featured possible Nazi imagery. Facebook also recently announced that it would be studying racial bias in Facebook’s and Instagram’s algorithms. And, at the end of June, Zuckerberg announced that the company would be doing more to remove or label posts that incite violence, contain hate speech, or suppress voting. But many still feel that these measures are too little and too late.

One possible bright spot in all of this for Facebook, actually, is that $650 million settlement. While it’s obviously a lot of money, it’s far less than the $47 billion it could have lost if the case went to trial and, if accepted by the judge this time, means the end of a costly lawsuit. Facebook’s most recent quarterly earnings report showed revenue of nearly $18 billion, almost all of it from advertising. A $650 million loss will barely register.

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