This is pretty clear copyright infringement. Whoever took the picture owns the copyright.
Being a public figure would matter if this were a first amendment free speech issue, but it's not. It's just a plain violation of the Lanham Act, both due to the copyright infringement (17 U.S.C. §§ 101 et seq) and because of the false advertising claim (15 U.S.C. § 1125(a)(1)(B)) you could make because of the impression that the person endorses the ad (but I'm not a lawyer, for the record). So no, it's not legal, and illegal acts should not be allowed by any company's terms of service.
It's also ironic given how Facebook got its start (i.e. Facemash), which was by misusing photos copyrighted by Harvard.
Guys, I think, no matter how "nice" AppSumo is in deflecting this stuff, the fact is, they've done it before, and they keep doing it. It's shady, and it's rather lame.
This doesn't surprise me in the least, Appsumo is a pretty scummy operation, regardless of how much PR effort they put into cultivating the HN audience.
Not too long ago they advertised a deal that used Tim Ferriss' name to the material/product being advertised but then sent out an email next day or so that apologized for "mistakenly" associating Tim Ferriss with the deal when in fact he wasn't.
Earlier this year I unsubscribed from their newsletter. The unsubscribe page had a feedback survey stating that a reason was required. That really put me off. You can't require someone to give you feedback in order to unsubscribe from a newsletter (it may a violation of canspam, as well). I tweeted about it. They tweeted back an apology, saying it would be changed, but by that time the damage was done re my image of the company.
Try signing up for their spamletter. Then try reading halfway through their incredibly annoying spam when you get it. It reads like the transcription of a carnival barker.
I don't know if their practices are actually scummy. But their communication definitely has the same feel as most scummy MLM materials.
They're trying to mimic the supposed charm of the Groupon deals, but don't seem to have the skill to do so in a way that's widely appealing. YMMV as to whether Groupon has or ever had said skill themselves.
Copyrights and trademarks
Ads cannot include any content that infringes upon the rights of any third party, including copyright, trademark, privacy, publicity or other personal or proprietary right.
The advertiser must have intellectual property rights to the creative and be permitted to display such creative as advertising on the Facebook Site.
So yes, it is clearly not allowed, assuming that the copyright holder has not given the advertiser the permission to use his picture.
This is not the first time that AppSumo has run an ad with a person's likeness. When a public figure has a fan page, I think it's safe to say that it's fair game (per Facebook's TOS) for Facebook advertisers to target fans of that person. I get targeted ads for authors and bands all the time that use a similar tactic. It's actually not that different from someone buying a Google ad using your name. I think what was jarring to Battelle was that he thought that AppSumo was targeting his friends, and not his "fans".
It's a disruptive, unorthodox, mischievous public relations hack. Also a legal and moral hack. Or at least, that's probably how they feel about it. This is the dark side of thinking outside of the established box: sometimes it's not that others don't see the outside of the box: it's that, on average, we don't want anyone to go outside the box in that way.
Remember: getting away with murder is hacking the justice system.
Not really surprised, I just went to unsusbcribe from their newsletter this morning, was getting increasingly tired of their over the top sales shpeel.
Being a public figure would matter if this were a first amendment free speech issue, but it's not. It's just a plain violation of the Lanham Act, both due to the copyright infringement (17 U.S.C. §§ 101 et seq) and because of the false advertising claim (15 U.S.C. § 1125(a)(1)(B)) you could make because of the impression that the person endorses the ad (but I'm not a lawyer, for the record). So no, it's not legal, and illegal acts should not be allowed by any company's terms of service.
It's also ironic given how Facebook got its start (i.e. Facemash), which was by misusing photos copyrighted by Harvard.