Government regulators are sharing some alarming information about Facebook: They believe the online social network has often misled its more than 800 million users about the sanctity of their personal information.

The unflattering portrait of Facebook’s privacy practices emerged Tuesday in a Federal Trade Commission complaint alleging that Facebook exposed details about users’ lives without getting legally required consent. In some cases, the FTC charged, Facebook allowed potentially sensitive details to be passed along to advertisers and software developers prowling for customers.

To avoid further legal wrangling, Facebook agreed to submit to government audits of its privacy practices every other year for the next two decades. The company committed to getting explicit approval from its users — a process known as “opting in” — before changing their privacy controls.

The FTC’s truce with Facebook, along with previous settlements with Google and Twitter, is helping to establish more ground rules for online privacy expectations even as Internet companies regularly vacuum up insights about their audiences in an effort to sell more advertising.

Although Facebook didn’t acknowledge any wrongdoing in the legal papers it signed with the FTC, Facebook co-founder and CEO Mark Zuckerberg was more contrite in a blog post Tuesday.

Zuckerberg Confesses “Mistakes”

“I’m the first to admit that we’ve made a bunch of mistakes,” Zuckerberg wrote. “In particular, I think that a small number of high-profile mistakes … have often overshadowed much of the good work we’ve done.”

The proposed 20-year agreement would require Palo Alto, California-based Facebook to get clear consent from users before sharing material posted under earlier, more restrictive terms, the FTC said today in a statement. It would also compel independent reviews of Facebook’s privacy practices.

“Companies must live up to their promises about privacy,” FTC Chairman Jon Leibowitz said on a conference call with reporters. The settlement “will protect consumer choices and ensure they have full and truthful information about their data.”

The settlement is part of an effort to resolve legal issues that could be a distraction as Facebook moves toward an initial public offering, said Francis Gaskins, president of Los Angeles- based, a Web site that tracks IPOs. Facebook is considering an IPO that would raise $10 billion and value the company at more than $100 billion, a person familiar with the matter said.

The FTC’s 19-page complaint casts a glaring spotlight on how Facebook has approached its users’ rights to privacy at a time that it is facing tougher competition from Internet search leader Google Inc. (Nasdaq: GOOG), which has attracted more than 40 million users to a social service called Plus just five months after its debut.

Google tried to lure people away from Facebook with a system that made it easier to guard their personal information. Facebook has responded by introducing more granular privacy settings.

The FTC cracked down on Google eight months ago for alleged privacy abuses that occurred last year when the company attempted to plant a social network called Buzz within its widely used Gmail service. Like Facebook, Google agreed to improve its privacy practices and submit to external audits for the next 20 years.

Twitter, the online short-messaging service, also struck a settlement with the FTC in June 2010 to resolve charges that it didn’t do enough to protect users’ accounts from computer hackers.

‘Clear the Decks’

“They’re obviously trying to clear the decks to take off,” Gaskins said in an interview, adding that the settlement “should give some comfort” to potential investors.

Marc Rotenberg, executive director of the Electronic Privacy Information Center, a Washington-based advocacy group that filed a complaint against Facebook over privacy issues in 2009, said today’s settlement “is a sweeping order that will prevent Facebook from disregarding the privacy interests of its users in the future.”

It should also should send a message to the Internet industry at large, Maneesha Mithal, associate director of the FTC’s Division of Privacy and Identity Protection, said in an interview.

‘Good Practices’

“The provisions of the order are good practices for all companies to follow,” Mithal said. “Companies should seek permission from consumers before they make changes to how they treat personal information.”

Zuckerberg said the company already has addressed many of the FTC’s concerns. On Tuesday he appointed Erin Egan, a former partner at Covington & Burling who specialized in data security, as chief privacy officer, policy, and Michael Richter, the company’s head privacy counsel, as chief privacy officer, products, Zuckerberg said.

The settlement, which the FTC’s commissioners approved 4-0, requires Facebook to establish a “comprehensive privacy program” and block access to a user’s account within 30 days of it being deleted, according to the FTC’s statement. The company also is barred from making any deceptive claims about its privacy practices.

Independent Audits

Audits by an independent third party will help build faith in Facebook’s efforts, said Elliot Schrage, a Facebook spokesman.

“Oversight fosters trust by providing users with additional assurances that the commitments we make are being upheld,” he said in an e-mail.

Michael Gartenberg, an analyst at Gartner Inc., a Stamford, Connecticut technology research company, said, “There’s no doubt Facebook and privacy have not gone well together in the past.”

The FTC said Facebook shared users’ personal information with advertisers after promising it wouldn’t. Facebook also pledged it would restrict sharing of information to designated “friends” of users while the data also was accessible to third-party applications used by the friends, the FTC said in the statement.

Facebook assured users that third-party applications only had access to data required for them to function, while, in fact, the applications had access to almost all of a user’s personal information, according to the agency.

(Bloomberg news and The AP contributed to this report.)

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