Slashdot contributor Bennett Haselton writes: "Facebook settled out of court over displaying ads that told you which of your friends had 'liked' a product or service, and another lawsuit is currently pending over the use of minors' pictures specifically in similar ads. (Not to be confused with another recently filed lawsuit alleging that Facebook converts private messages into public 'likes'.) Google+ tried to limit its liability by only showing the faces of users over 18 when showing which friends 'like' a page. I'm all for more privacy for social networking users, and if it's true that Facebook has been silently marking users as publicly 'liking' a page because they mentioned the page in a private message, the plaintiff's lawyers ought to clean them out for that one. But in cases where you willingly and knowingly 'liked' a page, Facebook and Google+ ought to be able to tell that to your friends in advertisements, without being sued for it." Read on for the rest of Bennett's thoughts.
The rationale for the case against the Facebook 'your-friends-have-liked-this' ads, seems to be that Facebook is violating laws and social norms against using someone's image in a commercial endorsement without their permission. But I can only think of two reasons for why those laws and social norms exist, and neither of those reasons would seem to apply to Facebook 'likes.' The two main reasons that come to mind are (1) loss of control over one's image, and (2) the creation of the false impression that the company has paid for a product endorsement.
Consider first the issue of the loss of control over your image. You would probably be annoyed if a company took a picture of your face and started featuring it prominently in their advertisements without your permission. (If you had taken the photo yourself, then the company would of course also be on the hook for copyright infringement, but let's assume that the company had one of their photographers take the photo so that they owned the copyright, and the only issue is the unfair use of your likeness.) At that point, you have no control over the dissemination of the picture. Even assuming that you like the way you look in the picture, you might find it creepy to think of thousands of strangers looking at the photo of you (or your kids). That would be an argument in favor of requiring companies to get people's permission before using their likenesses in advertisements.
But that argument would not apply to an ad in your Facebook feed which shows you the profile pictures of friends who have 'liked' a page. Those profile pictures were uploaded by those users expressly so that their Facebook friends could see them. At any time, they can select a different 'profile picture', or remove any profile pictures that they no longer wish to be visible to friends. (Facebook took a lot of well-deserved criticism for exposing users' profiles and pictures to non-friends, as well, even for users who have disabled that setting — but that's a separate issue. The "ads" in question only display your pictures to your friends.)
Second, consider the issue of creating the false impression of a paid product endorsement. With traditional advertisements, it might seem strange that people respond to ads featuring a nice, attractive-but-not-in-your-face-attractive person using a product, even if the photo doesn't seem to directly convey any information about the product itself. What the photo really conveys is that the company behind the product has resources — to hire models, photographers, lighting crews, photo editors, and of course to buy the space to display the ad. This ostentatious display of "resources" might reassure a customer that the company similarly has the resources to test their product thoroughly, to replace a product that breaks, or to honor their returns policy. But it only works if the user believes that the company actually did spend money on all of those things to create the ad.
This is even more true of ads featuring paid celebrities. Steven Landsburg, in a passage from his book The Armchair Economist, writes:
"[I]t is also common to see products endorsed by celebrities who have no particular expertise, and who are obviously being paid for their testimony. Well-known actresses endorse health clubs; ex-politicians endorse luggage; in Massachusetts recently, a Nobel prize-winning economist endorsed automobile tires. People respond to these ads, and sales increase. What useful information can there be in knowing that the manufacturer of your overnight bag paid a six-figure fee to feature a famous person in a television commercial? How can it be rational to choose your luggage on this basis?
Let me suggest an answer. [...] Hiring a celebrity to endorse your product is like posting a bond. The firm makes a substantial investment up front and reaps returns over a long period of time. A firm that expects to disappear in a year won't make such an investment. When I see a celebrity endorsement, I know that the firm has enough confidence in the quality of its product to expect to be around awhile.
(The full argument is in the text of The Armchair Economist on Scribd, although you've probably got the idea.)
However, none of this applies to your friend's profile picture appearing in an ad in your Facebook feed. No rational person would think that meant that the friend had been paid for the endorsement, so the ad doesn't falsely convey anything about the company's "resources." (All you really know is that the company paid some money to buy the ad — but, unlike a print ad that appears in a national magazine, you have no idea how much they spent to promote their brand on Facebook just because you happen to be seeing the promotion.) The valuable information conveyed in the ad is just what it seems — at least one of your friends thought the company or product was cool enough to 'like' it.
(This argument does leave an interesting case uncovered. What if a real recognizable celebrity 'liked' a page on Facebook, and that company paid for a flurry of ads in people's Facebook feeds prominently featuring the celebrity's likeness, truthfully claiming that the celebrity liked their product, but without paying the celebrity? I don't happen to know of any real-life case where a company found out that a celebrity actually used their product, and then started advertising the fact that their product was used by that celebrity without actually paying the celebrity, using the defense that all they were doing was stating a true fact. (Tell me in the comments if you know if that's happened.) However, Facebook seems to have ducked that issue for now, because virtually no actual celebrities have regular user profiles on Facebook; they have official fan pages, clearly demarcating the line between "them" and "us." So the sponsored ads are not likely to include a real celebrity's likeness any time soon.)
Fundamentally, if an 'ad' appears in your Facebook feed telling you that some of your friends 'liked' a page, all that ad is doing is stating a true fact, something that Facebook ought to be allowed to do under the First Amendment. I don't agree with Mitt Romney that "corporations are people too, my friend," but they do have First Amendment rights, which I would argue should include the right to tell you if friends of yours have publicly indicated that they like a product or service.
One currently pending lawsuit against Facebook makes much of the fact that Facebook's ads were displaying the profile pictures of minors, and that California law requires the permission of a minor's parents to use their likeness in an ad. But when that law was drafted, the authors probably had in mind the kind of traditional advertisements that raise the two concerns above — where (1) the minor and their family lose control over the dissemination of their image, and (2) the use of the likeness creates the false impression of a paid advertisement. It's not obvious that they would have considered the law to apply to a note in your Facebook feed telling you that your friend had liked a page. To the extent that the law could be interpreted to prohibit those kinds of notifications, that's arguably a violation of Facebook's First Amendment rights.
Of course, I've made this argument by assuming that the two reasons listed at the top are the only reasons that a company should be required to get people's permission before using their likeness in advertisements, and that if those reasons don't apply to Facebook 'likes,' then the permission requirement should not apply. But there may be other reasons besides those two, reasons that would also apply to ads listing Facebook 'likes,' and then that would invalidate the argument. But in the meantime, even though I don't use Facebook, if I did, I'd tentatively be fine with Facebook showing my profile picture in 'ads' to friends listing me as one of a group of people who had 'liked' a particular page.
On the other hand, if Facebook is really scanning your private messages for mentions of a particular page, and then automatically indicating on your profile that you 'like' that page, then yes, that means that any 'likes' acquired in that manner were not intended by the user to be public, and yes, that changes everything.