Facebook on Tuesday agreed to overhaul its lucrative targeted advertising system to settle accusations that landlords, lenders and employers use the platform to discriminate against black people, women, senior citizens, people with disabilities and others.
The far-reaching settlement compels Facebook to withhold a wide array of detailed demographic information -- including ZIP codes, sex and age -- from advertisers when they market housing, credit and job opportunities.
Although the settlement is unlikely to deal a major blow to Facebook's bottom line, the change represents a significant shift for a company that has built one of the most successful advertising platforms in history.
Facebook has long allowed advertisers to target potential customers and employees based on their demographics and interests, as gleaned from the vast trove of data the platform collects. Now, the social media giant is stepping away from that approach, amid mounting evidence that its microtargeting techniques were abused.
Civil-rights advocates have warned for years that Facebook's ads violated anti-discrimination laws because advertisers were able to use that data to exclude specific groups of people. The Justice Department allowed a lawsuit to proceed last year over Facebook's objections, arguing that the company can be held liable for ad-targeting tools that deprive people of housing offers.
Until now, the company made only minimal tweaks to its systems and largely resisted calls for change, arguing that these ads were standard in online advertising.
Tuesday's announcement will require a major overhaul of Facebook's software and could make the platform less valuable to certain advertisers. Many companies use Facebook to recruit workers.
Facebook said it will make the changes by the end of the year, creating a separate portal to limit how much advertisers for housing, employment and credit can micro-target their audience.
"We are fully taking all the steps we can to protect people from discrimination on our platform," said Sheryl Sandberg, chief operating officer at Facebook, in an interview with The Washington Post. "We believe this settlement goes not just to [the letter of] the law but beyond the law in taking very, very strong action to make sure any discrimination doesn't happen."
Sandberg declined to comment about whether Facebook's advertising practices were illegal.
The settlements resolve lawsuits and other legal challenges filed in recent years by the National Fair Housing Alliance, the American Civil Liberties Union, the Communications Workers of America and others.
It arrives at a moment when Facebook is facing growing scrutiny from regulators, lawmakers and the public. The company is being investigated by the Federal Trade Commission, the Securities and Exchange Commission and several state attorneys general over the Cambridge Analytica data privacy controversy.
"This type of discrimination that we thought was stamped out in the '60s and '70s by our civil-rights laws should not be given a new life in the digital era," said Galen Sherwin, a senior staff attorney at the ACLU. "This settlement establishes that the Web is not a civil-rights-free zone."
The company is paying out less than $5 million to the parties, including a $2.5 million settlement with the National Fair Housing Alliance to train advertisers on how to comply with housing and lending laws, and advertising credits to promote fair housing.
"This is going to have a very broad reach," said Lisa Rice, president and chief executive of the National Fair Housing Alliance. "Technology and how data is used is really the new civil-rights frontier."
Federal housing law prohibits discrimination based on race, color, religion, national origin, gender, disability and family status. Facebook said the new platform will also prevent advertisers from discriminating based on sexual orientation, age, ethnicity, and other characteristics covered by state and local civil-rights laws.
The National Fair Housing Alliance and other housing groups sued Facebook last March, alleging that the company created pre-populated menus for advertisers that made it easy to block people with disabilities or families with children from seeing rental or sales ads.
Facebook used terms such as "English as a second language," "disabled parking permit," or "Telemundo" -- which advocates argue are clues that would enable discrimination.
Fair housing groups say that online companies such as Facebook have superseded billboards, "rent signs," and "newspaper classifieds" to become the hubs where people look for homes and jobs. Facebook has "abused its enormous power," the suit alleged.
The ACLU and other groups filed a legal complaint last September with the federal Equal Employment Opportunity Commission, accusing Facebook of enabling discriminatory job postings with its ad-targeting tools. Some firms, for example, were targeting ads only to people under age 45.
The legal efforts followed a ProPublica investigation beginning in 2016 that found that Facebook allowed advertisers to exclude blacks, Hispanics and Asian Americans. While Facebook later said it would bar housing, employment and credit ads that discriminate based on "ethnic affinity," it continued to allow other forms of discriminatory targeting, including gender and disability, civil-rights groups alleged.
Business on 03/20/2019