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August 15, 2008
Beacon returns to haunt Facebook, advertisers

It was supposed to be the ad platform of the future -- salvation for those who worried that social networks couldn't be monetized. That was the promise of Beacon, Facebook's nearly catastrophic attempt to bring ads to its users. But while the company has mostly put the Beacon debacle behind it, a new class-action lawsuit could reopen old wounds.

In a lawsuit filled earlier this week in a California court, Facebook and several advertisers were accused of violating the privacy of the social network's users. Among those named in the suit were Blockbuster, Fandango, Overstock.com, STA Travel, Zappos, Hotwire (owned by IAC/InterActiveCorp), and GameFly.

So far, Facebook and the companies named in the suit have declined to comment.

The lawsuit comes at a strange time for Facebook. According to recent reports, Facebook has managed to outpace MySpace in terms of popularity. But the company is still struggling to find ad dollars, and it has lost a little of its luster on news that CEO Mark Zuckerberg and others have been selling their equity, prompting many to believe that the company is drastically overvalued.

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