Facebook has agreed to shut down its controversial Beacon advertising program, at long last bowing to privacy advocates and users of the social-networking site concerned about the system's Orwellian nature. The agreement is part of a settlement in a class action filed against Facebook last year.

Beacon has been a key Facebook feature since its November 2007 rollout. The service recorded users' activity on other sites, then relayed those actions back to the user's friends. The concept was intended to promote products and services in a more personal way; Facebook users who saw activity on friends' news feeds, the thinking went, would be more likely to visit the external website themselves. At its inception, over 40 websites signed up to participate.

The system tracked and recorded activity such as buying a product or signing up for a company's service. According to the lawsuit, Facebook began tracking users' actions even before it gained permission to post that information on their profiles. By the time users became aware of the practice, the suit alleges, personally identifying information had already been communicated to Facebook.

Opt-in

Beacon has attracted controversy almost since its inception. In November 2007 the same month the service was introduced Facebook announced that users would be given greater control over how the Beacon system worked on their page. When that failed to satisfy privacy-conscious consumers, Facebook turned Beacon into an opt-in system, so that consumers had to actively choose to participate in the program.

At the time, Facebook CEO Mark Zuckerberg took action to stop the bleeding. We've made a lot of mistakes building this feature, but we've made even more with how we've handled them, he said in a groveling statement. We simply did a bad job with this release, and I apologize for it.

The extent to which Facebook had actually protected users' privacy, however, was still in dispute. An analyst with Computer Associates (CA) found that even consumers who didn't opt into Beacon still had their actions tracked by Facebook; the activity just wasn't reported on the consumers' news feeds. More disturbingly, CA reported that even users who weren't logged into Facebook still had their actions tracked by the site.

Complex procedure

The suit also notes that Beacon was originally an opt-out system, meaning that to remain unaffected by Beacon, users had to actively turn the feature off. While this was technically possible, the suit alleges that the procedure to do so was exceedingly complex, requiring users to go to every participating site and opt out on each one. This procedure discouraged consumers from taking action, the suit says.

Facebook claims it had already been phasing the Beacon program out, but that a small number of advertisers were still making use of the service. In a statement, company spokesman Barry Schnitt said that Facebook has learned a great deal from the Beacon experience.

Beacon was just one of many Facebook features that drew the ire of privacy advocates. Facebook has revamped its privacy controls twice in the past three months, in response to concerns that the system had grown large enough that users were ignoring it altogether.

The suit concerns the period between November 7, 2007, when Beacon was introduced, and December 5, 2007, when the opt-out feature became available. The settlement agreement was finalized last night and will require final approval from the U.S. District Court for the Northern District of California.