WASHINGTON The Myspace social network has settled charges that it misled millions of users about sharing personal information with advertisers, part of a larger U.S. government effort to crack down on companies that cash in on consumers' data without their consent.
The settlement with the U.S. Federal Trade Commission announced on Tuesday will require the Beverly Hills, Calif.-based company to create a comprehensive program that protects consumers' information and bars Myspace from misrepresenting how it protects its users' privacy.
Myspace will be subject to independent reviews of its privacy program for the next 20 years.
The FTC in 2010 settled with Twitter over failures to safeguard users' personal information. Last year it also found that Facebook and Google Inc (GOOG.O) engaged in deceptive privacy practices. Facebook and Google's settlements stipulate 20 years of audits to ensure consumers' privacy is protected, while Twitter is subject to 10 years of audits.
There is growing consumer concern about how Internet giants collect and trade in vast amounts of detailed information about their users' online activities and real-life identities.
The White House and FTC have unveiled privacy guidelines to address privacy violations, but they rely heavily on voluntary commitments by Internet companies and advertisers.
Lawmakers have used the specter of legislation largely to encourage self-policing, as a significant crackdown would face a difficult path through the divided U.S. Congress.
Digital advertising company Specific Media teamed with pop star Justin Timberlake last summer to buy Myspace from News Corp (NWSA.O) for $35 million, a fraction of the $580 million News Corp paid for it in 2005. News Corp took a minority stake in Specific Media as part of the sale.
"In order to put any questions regarding Myspace's pre-acquisition advertising practices behind us, Myspace has reached an agreement with the FTC that makes a formal commitment to our community to accurately disclose how their information is used and shared," Specific Media said in a statement.
The company added that it conducted a thorough review of Myspace's business practices after the acquisition with a focus on ensuring privacy protections in its ad delivery system.
These Friend IDs could be used to find a user's public profile, which would give advertisers access to their name, age, gender and any other information posted to the profile.
The FTC charged that the policy was deceptive and violated federal law.
The settlement agreement will be open for public comment through June 8, after which the FTC will decide whether to make the consent order final.
(Reporting By Jasmin Melvin; Editing by Tim Dobbyn)