Facebook settles face recognition case for $550 million

Facebook has reached a settlement in a class action lawsuit with Illinois users over the use of facial recognition. The social network will pay $550 million in damages and to cover legal costs.

A group of Illinois residents filed a lawsuit alleging that Facebook’s use of facial recognition violates the state’s Biometric Information Privacy Act. It involved the Tag Suggestions feature, where users were presented with suggestions for tagging photos. Facebook used facial recognition to generate those suggestions and did not request explicit permission from the people concerned.

Facebook disagrees with the charges and denies any wrongdoing, but has reached a settlement anyway. The social network pays 550 million dollars, converted about 499.5 million euros. The three law firms that represented the citizens speak in a press release of a victory and state that it is the highest settlement amount ever in a privacy case. The settlement still has to be approved by the judge.

Due to a settlement, no decision has been made in the case. The relevant state privacy law allows residents to sue companies and demand up to $5,000 per person per violation. If the court had ruled in the users’ favour, the amount might have been much higher.

In a statement to The New York Times, a Facebook spokesperson said it was “in the best interest of its community and shareholders” to settle the matter by reaching a settlement. In September last year, Facebook disabled facial recognition worldwide. This only works after explicit permission.

The $550 million settlement is hardly a dent in the social network’s financial results. Facebook had revenue of $21.1 billion in the quarter, up 25 percent from a year ago. Net profit was $7.35 billion, an increase of 7 percent.

For the whole of 2019, Facebook achieved a turnover of 70.7 billion dollars, which was 27 percent more than in 2018. The profit came in at 18.5 billion dollars, 16 percent less than in the previous year. According to Facebook, the number of users continues to increase. In December, there were an average of 1.66 billion active users worldwide and there are 2.5 billion monthly. That is respectively 9 and 8 percent more than in the same period a year ago.

Average revenue per user also increased. Globally, that averaged $8.52 per user in the past quarter. In the US, this is by far the highest at $41.41 per user. In Europe, that amount is USD 13.21. Facebook’s revenue comes almost exclusively from advertising.