The Federal Trade Commission reached a settlement with Google on Wednesday over Google Buzz, the social networking tool rolled out last year, which spawned a slew of privacy complaints.
Under the settlement announced by the US regulator, Google is required to implement a comprehensive privacy program and will be subject to independent privacy audits every two years for the next 20 years.
"When companies make privacy pledges, they need to honor them," FTC chairman Jon Leibowitz said in a statement. "This is a tough settlement that ensures that Google will honor its commitments to consumers and build strong privacy protections into all of its operations."
Alma Whitten, Google's director of privacy, product and engineering, apologized in a blog post for privacy shortfalls with Buzz, which Google launched in February 2010 as an answer to Facebook and Twitter.
"The launch of Google Buzz fell short of our usual standards for transparency and user control -- letting our users and Google down," Whitten said. "We'd like to apologize again for the mistakes we made with Buzz.
"We are 100 percent focused on ensuring that our new privacy procedures effectively protect the interests of all our users going forward," she said.
Digital rights groups and members of Congress welcomed the FTC settlement, saying it sent a message to Google and other Internet companies that they need to incorporate greater privacy protections into their products.
Google has been facing increased scrutiny from US regulators and European authorities as it has grown from a scrappy startup into the titan of Internet search.
In October, the FTC ended a separate inquiry into the collection of private wireless data by Google's "Street View" mapping service after Google pledged to strengthen its privacy and security practices.
France's data privacy regulator last week imposed a fine of $142,000 on Google for collecting private information while compiling Street View.
In another ruling last week, a US judge dealt a setback to Google's plans for a vast digital library and online bookstore, rejecting a copyright settlement hammered out by the Internet giant with authors and publishers.
A coalition of online travel sites is seeking, meanwhile, to block Google's proposed $700 million acquisition of flight information company ITA Software claiming it would give Google too much control over the lucrative sector.
In a move separate from the FTC action, Google agreed in September to pay $8.5 million to settle a class action privacy lawsuit over Google Buzz.
The FTC alleged that the Mountain View, California-based Google used deceptive tactics and violated its privacy promises to consumers when it launched Buzz through its popular email service Gmail.
The FTC said Google led Gmail users to believe they could choose whether or not to leave Google Buzz but the options for doing so were "ineffective."
Controls for limiting the sharing of personal information on the network were also "confusing and difficult to find," according to the US regulator.
Google received thousands of complaints about Buzz over the public disclosure of email contacts, which, the FTC said, "included, in some cases, ex-spouses, patients, students, employers, or competitors."
The settlement bars Google from making "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.
Jeff Chester of the Center for Digital Democracy said the FTC action had "sent a powerful message to Google and the online data collection giants" that they need to behave more responsibly.
Senator Jay Rockefeller, a Democrat from West Virginia who heads the Senate Commerce Committee, said Google "was just plain wrong when it opted people into Buzz without their consent.
"This should be a wake-up call for online businesses -- both large and small -- of the need to be clear and honest about how the personal information of consumers is collected and used," Rockefeller said.
John Simpson of Consumer Watchdog welcomed the FTC settlement but said Google "needs to be punished and feel pain on its bottom line."
"Nothing will completely stop Google from invading users' privacy until it gets hit where it hurts, its bank accounts," Simpson said.