"Nothing in this order will restrict Facebook's ability to innovate," said Leibowitz. But, he added, "Facebook's innovation does not have to come at the expense of consumer privacy".
Under the settlement, which must be approved by an FTC administrative law judge, Facebook is barred from being deceptive about how it uses personal information, and is required to get permission before changing the visibility of the personal information users have posted.
The settlement follows a similar agreement in March between the FTC and Google over the web search leader's rollout of its own social network called Buzz.
In 2010, the FTC settled charges with Twitter, after the agency alleged that the social networking service had failed to safeguard users' personal information.
Ray Valdes, an analyst at industry research firm Gartner, said he did not think the timing of the settlement was directly related to Facebook's IPO plans.
"I don't think it's directly tied to the IPO. The IPO is still off in the distance," he said, but added: "There's some connection. I'd make more of a direct link if this was happening in January."
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