Is Facebook Free of This Big Mess?

Facebook (NASDAQ:FB) fixed some of its recent bad press by settling a lawsuit with users concerned over alleged privacy violations because of the social network’s Sponsored Stories service. Facebook agreed in principle to a settlement, though terms were not disclosed.

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The Sponsored Stories service is an advertising system that lets businesses add potential customers by having people with Facebook accounts pitch their friends. The suit, filed in March 2011 in Santa Clara County Superior Court, alleged that actions such as checking in to a location or using Facebook’s “Like” button were forcing users to take part in Sponsored Stories advertising.

“Even if members had read [Facebook’s] terms of use, they could not know that their likenesses and names would be later used in Sponsored Stories ads sent to their Facebook friends,” the complaint read.

However, the settlement does not answer any questions about the company’s future revenue plans. Facebook went public Friday with its shares initially priced at $38, but the stock has fallen since, closing at $31 on Tuesday. One of the concerns for investors and analysts has been the worry over Facebook’s ability to make more money through advertising.

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