Facebook to overhaul ad targeting to prevent discrimination

SAN FRANCISCO — Facebook will overhaul its ad-targeting systems to prevent discrimination in housing, credit and employment ads as part of a legal settlement.

For the social network, that’s one major legal problem down, several to go, including government investigations in the U.S. and Europe over its data and privacy practices.

The changes to Facebook’s advertising methods — which generate most of the company’s enormous profits — are unprecedented.

The social network says it will no longer allow housing, employment or credit ads that target people by age, gender or zip code.

Facebook will also limit other targeting options so these ads don’t exclude people on the basis of race, ethnicity and other legally protected categories in the U.S., including national origin and sexual orientation.

The social media company is also paying about $5 million to cover plaintiffs’ legal fees and other costs.

Facebook and the plaintiffs — a group including the American Civil Liberties Union, the National Fair Housing Alliance and others — called the settlement “historic.” It took 18 months to hammer out.

The company still faces an administrative complaint filed by Department of Housing and Urban Development in August over the housing ads issue.

What’s not yet clear is how well the safeguards will work.

Earlier in March, CEO Mark Zuckerberg announced a new “privacy-focused vision” for the company to focus on messaging instead of more public sharing, but he stayed mum on overhauling Facebook’s privacy practices in its core business.

Galen Sherwin, senior staff attorney at the ACLU and the group’s lead attorney on its suit, praised the settlement as “sweeping” and said she expects it to have ripple effects through the tech industry.

Facebook agreed to let the groups test its ad systems to ensure they don’t enable discrimination. The company also agreed to meet with the groups every six months for the next three years, and is building a tool to let anyone search housing-related ads in the U.S. targeted to different areas across the country.

Endlessly customizable ad targeting is Facebook’s bread and butter. The ads users see can be tailored down to the most granular details.

“There is a lot of pressure on Facebook and its ability to target ads,” said emarketer analyst Debra Aho Williamson. “And a lot of scrutiny on what it should and shouldn’t be able to do.”

In a brief interview with The Associated Press, Facebook chief operating officer Sheryl Sandberg declined to say whether the changes will hurt the company’s advertising revenue. The most important thing, she said, was to protect Facebook’s users from discrimination.

“Today’s changes mark an important step in our broader effort to prevent discrimination and promote fairness and inclusion on Facebook,” she said in a blog post Tuesday. “But our work is far from over.”