Facebook

Facebook has kicked off a new Web page explaining how and why the social network depends on advertising.

On its "About Advertising on Facebook," page, the company says it spends more than $1 billion each year to run its business, and so it relies on ads to pay the bills.

Addressing one touchy topic, Facebook stressed that it doen't sell your personal information to advertisers but rather makes its money from displaying the ads.

"Selling your information would actually be bad for Facebook. Here's why: Facebook was created to help you share and connect with the people in your life. If you don't feel like you're in control of who sees what you share, you probably won't use Facebook as much, and you'll share less with your friends."

Comparing two forms of advertising, the company explained how Facebook ads differ from sponsored stories.

In a Facebook ad, a business creates a regular ad to promote itself. But you if click on the "like" button for that business's Facebook page, a story about you liking it may pop up in the ad that your friends see, along with your name and photo.

In a sponsored story, a company pays Facebook to display posts that mention its product or business. Sponsored stories are created when a Facebook member "likes" a certain company page. Those "stories" then display the member's name, photo, and a line asserting that the person likes that company's business or product.

Launched last January, sponsored stories have gotten Facebook into some legal trouble.

The company is currently up against a lawsuit filed by plaintiffs claiming that sponsored stories violate a California statute preventing the use of a person's name or photo in a paid ad without that person's consent. Facebook had tried to get the case dimissed, but a U.S. District judge in San Jose, Calif., denied the request last Friday, paving the way for the suit to proceed.

Despite the lawsuit, Facebook has big plans for sponsored stories.

Normally appearing on the right side of your Facebook page along with regular ads, sponsored stories will start jumping into your actual news feed next month. Addressing concerns over such ads appearing front and center, Facebook has promised that people will see no more than one sponsored story in their news feeds per day.

And though you can't opt out of Facebook ads or sponsored stories, you can always delete an ad by clicking on the red X in the upper right corner.