Google has agreed to establish a "comprehensive privacy program" to settle allegations that last year's launch of Google Buzz, a foray by the Web giant into social networking, initially shared more information than users reasonably expected.

The Federal Trade Commission said today that the Mountain View, Calif.-based company has entered into a settlement agreement, which does not admit any wrongdoing, that includes regular reports on its privacy practices prepared by an independent professional for the next 20 years.

"When companies make privacy pledges, they need to honor them," said Jon Leibowitz, the Democratic chairman of the FTC. "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."

The settlement, approved 5-0 by the commissioners, is subject to public comment and final approval. Commissioner J. Thomas Rosch, a Republican, suggested in a separate statement that he has "substantial reservations" about the scope of the settlement.

Did Google agree to it "because it was being challenged by other government agencies and it wanted to 'get the commission off its back'" Rosch wrote.

The worrisome section, he said, is three paragraphs that say Google will "obtain express affirmative consent" from users--opt-in, in other words--any time it proposes any "additional sharing" of certain types of user information. That appears to levy new restrictions on Google's ability to launch new products that will not apply to its larger social network competitors, including Facebook, Twitter, and even Apple and LinkedIn.

Related links &149' Google's social side hopes to catch some Buzz &149' What Google needs to learn from Buzz backlash &149' Google changes Buzz privacy settings--again

On the other hand, the FTC signaled today that it views the settlement terms as current "best practices" for the Internet industry, indicating it expects other companies to abide by similar terms -- which could mean Google's market disadvantage would be limited.

In a message on Twitter, Katie Ratte, lead attorney in the FTC's privacy and identity protection division, wrote that "the best practices set forth in the order should serve as a guide to industry." And FTC has been asked (PDF) to look into controversial changes to Facebook's privacy settings as well, meaning the opt-in language of the Google Buzz settlement could reappear.

In a blog post this morning, Google product privacy director Alma Whitten apologized for the privacy misstep, saying Buzz's launch "fell short of our usual standards for transparency and user control--letting our users and Google down."

What's unclear, and has been since last year (see previous CNET report) is how many people use Buzz on a regular basis. There's some indication, according to an estimated prevalence of Buzz buttons on Web sites, that usage has grown slowly but consistently since last summer. Google said in February 2010 that "tens of millions of people have checked Buzz out," but has declined to be more specific.

Google Buzz disclosed your "followers" and who you were "following" only if you had elected to publish that information publicly on your Google profile in the first place. But critics have charged that the choices were not as obvious as they could have been and violated a law enforced by the FTC prohibiting "deceptive" business practices.

The Electronic Privacy Information Center, a Washington, D.C.-based advocacy group, called today's settlement "the most significant privacy decision" by the FTC to date. Last year, EPIC prodded (PDF) the FTC to investigate Buzz, asking it to "enjoin (Google's) unfair and deceptive business practices." That didn't happen, but the broader investigation did.

TechFreedom, a free-market think tank also in Washington, said the settlement shows that no new laws are needed. "Today's settlement should remind us that the FTC already has sweeping powers to punish unfair or deceptive trade practices," TechFreedom President Berin Szoka said.

Today's settlement comes as Google is under pressure from government competition agencies, with antitrust allegations in Europe and an ongoing Justice Department review of a $700 million bid to acquire airline flight and ticket information provider ITA Software. Rivals are increasing their anti-Google efforts, including objecting to the Google Book Search settlement and lobbying against what was a proposed partnership with Yahoo.

Disclosure: Declan McCullagh is married to a Google employee who is not involved with Google Buzz.