Google triggered a fierce user backlash when it integrated Buzz into its Gmail email service in February of 2010. The service automatically created public circles of friends for users based on their most frequent Gmail contacts.
But many users complained that they didn't want their all their email contacts to become part of a social network for anyone to see.
"The proposed settlement bars the company from future privacy misrepresentations, requires it to implement a comprehensive privacy program, and calls for regular, independent privacy audits for the next 20 years," the FTC said in a statement on its website.
In a post on its blog, Google said, "The launch of Google Buzz fell short of our usual standards for transparency and user control—letting our users and Google down." The company added, "While today's announcement thankfully put this incident behind us, we are 100 percent focused on ensuring that our new privacy procedures effectively protect the interests of all our users going forward."
Material from the Associate Press was used in this report.