Facial Recognition Start-Up Settles Privacy Lawsuit with Unique Twist
In a groundbreaking settlement, Clearview AI, a facial recognition start-up based in New York, has agreed to give a 23 percent stake in the company to Americans whose faces are in its database, rather than cash payments, in a class-action lawsuit accusing the company of invasion of privacy.
The controversy surrounding Clearview AI began when it was revealed by The New York Times in 2020 that the company had scraped billions of photos from the web and social media sites like Facebook, LinkedIn, and Instagram to build a facial recognition app used by thousands of police departments, the Department of Homeland Security, and the F.B.I. This revelation led to lawsuits being filed across the country, which were consolidated in federal court in Chicago as a class action.
According to court documents, the litigation has proven to be costly for Clearview AI, with the company facing the possibility of bankruptcy before the case could go to trial. The settlement, proposed by lawyers for the plaintiffs from Loevy + Loevy in Chicago, aims to provide a creative solution by giving the class a percentage of the company’s future value.
Under the terms of the settlement, anyone in the United States who has a publicly posted photo of themselves online could be considered a member of the class. The 23 percent stake in Clearview AI, valued at $225 million, would collectively be worth about $52 million for the class members. If the company goes public or is acquired, those who submitted a claim form would receive a portion of the proceeds. Alternatively, the class could sell its stake or choose to collect 17 percent of Clearview’s revenue after two years.
While the settlement still needs to be approved by Judge Sharon Johnson Coleman of U.S. District Court for the Northern District of Illinois, Clearview AI’s lawyer, Jim Thompson, expressed the company’s satisfaction with the agreement. However, not everyone is pleased with the proposed settlement, with critics like class-action lawyer Jay Edelson and privacy advocate Evan Greer raising concerns about the implications of financially benefiting from a company accused of privacy violations.
Despite the mixed reactions, the settlement represents a unique approach to resolving privacy disputes with tech companies and could set a precedent for future cases involving similar issues.
