Bloomberg News

News Corp.’s MySpace Settles Suit Claiming It Gave Away Data

June 28, 2011

(Updates with payment details in the ninth paragraph.)

June 28 (Bloomberg) -- News Corp.’s MySpace unit settled a lawsuit claiming the company gave aggregators data that was used to associate members by name, without their consent, to their Internet-browsing history.

MySpace changed its practices and paid a total of $15,000 to three users of the social networking site who sued and $750,000 to their lawyers, according to the settlement agreement filed today in federal court in Brooklyn, New York. The company also agreed to donate $50,000 to a nonprofit group or consultant to research the promotion of online privacy.

In “virtually all” cases where user identifications “remain part of the ‘advertising call’ transmission to a third party, MySpace now encrypts” the user identification, according to the agreement.

MySpace shared the data with aggregators after telling members they could restrict access to their information, according to the complaint. The suit, filed by New York law firms Milberg LLP and Reese Richman LLP on April 13, sought class-action, or group, status and unspecified damages.

Julie Henderson, a spokeswoman for New York-based News Corp., declined to comment.

MySpace denied any liability, according to the agreement.

The company made changes including removing user IDs from the “web addresses of all MySpace.com pages that only can be accessed by the profile owner,” according to the agreement.

Substantive Issues

The parties didn’t negotiate the lawyers’ fees or plaintiff payments until after the plaintiffs’ reached their settlement on the substantive issues, according to the agreement.

The three users, including one who filed a similar case last year in federal court in California, each got $5,000.

The MySpace users said in the complaint that “MySpace knowingly serves as and profits handsomely from being a conduit through which details of the most intimate aspects of its members’ lives, as reflected in their Internet browsing history and otherwise, are transmitted to data aggregators.”

Rupert Murdoch’s Newscorp., looking to conclude a sale of MySpace this week, is weighing two cash-and-stock offers for the social-networking service, according to a person with knowledge of the situation.

News Corp. is in talks with Golden Gate Capital, a San Francisco-based private-equity company, and Specific Media, operator of an online advertising network, said the person, who wasn’t authorized to speak publicly.

The case is Virtue v. MySpace Inc., 11-cv-1800, U.S. District Court, Eastern District of New York (Brooklyn).

--With assistance from Andy Fixmer in Los Angeles. Editors: Fred Strasser, Peter Blumberg

To contact the reporter on this story: Thom Weidlich in Brooklyn, New York, federal court at tweidlich@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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