Facebook is in talks with the Federal Trade Commission to settle claims that it violated users' privacy when it changed default privacy settings to disclose more information than was previously made public, according to a person familiar with the negotiations.
The proposed 20-year settlement would require Facebook to get express consent from users before sharing material posted under earlier, more restrictive terms, said the person, who declined to be identified because the settlement isn't final. It would also compel an annual, independent review of Facebook's privacy practices.
The FTC is stepping up its enforcement of privacy requirements at Internet companies and already has settled complaints with Google and Twitter this year.
Cecilia Prewett, a spokeswoman for the FTC, and Andrew Noyes, a Facebook spokesman based in Washington, declined to comment on the talks.
Facebook is under pressure to protect individuals' information as it seeks revenue from the more than 800 million users who play games, post photos and communicate using the site. The Palo Alto company, which people familiar with the matter said may hold an initial public offering as early as next year, is also under scrutiny in the European Union for possible privacy-rule breaches over use of personal data.
"In order to successfully issue its IPO, Facebook had to send a signal to investors that it's putting the threat of regulatory intervention aside," said Jeff Chester, executive director of the Center for Digital Democracy, a group that has urged the FTC to address privacy issues at Facebook and other online marketers.
The potential settlement stems from a Dec. 17, 2009, complaint filed by the Electronic Privacy Information Center.
The center asked the FTC to investigate whether consumers were harmed when Facebook changed its default privacy settings and called on the agency to require Facebook to give users "meaningful control over personal information." Nine consumer advocacy groups, including the American Library Association, Consumer Federation of America and the Privacy Rights Clearinghouse, signed on to the complaint.
"The FTC's action is long overdue," said Marc Rotenberg, the executive director of the privacy information center. "It's becoming increasingly obvious that the commission has to announce its final decision in this matter. The changes in Facebook privacy settings have continued to be the most frustrating online experience for Internet users."
Breaches alleged in the group's complaint include changes in Facebook settings in November and December of 2009 that induced users, in response to recommendations from the company, to reveal their names, profile photos, lists of friends, pages they are fans of, gender, geographic regions and networks to which they belong.
The complaint called on the FTC to compel Facebook to allow users to choose whether to disclose personal information and to choose whether to fully opt out of revealing information to third-party developers.
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