Google today settled the class action lawsuit it earned when it launched Google Buzz without any privacy controls.  Google Buzz is a social networking tool similar to Twitter that allows users to share information with their connections.  In order to jumpstart users’ social graph, Buzz users were automatically, and publicly, linked to people they often Gmail-ed with.  That made for some 
embarrassing
connections.

Google (GOOG) settled for  $8.5 million, most of which will go to fund organizations focused on Internet privacy education and policy.  The rest will likely cover court costs, legal fees and overhead.

“We are satisfied with the agreement and are glad to move forward,” said a Google (GOOG) spokesperson. “We have always been committed to offering users transparency and choice in Buzz and all our products, and will continue to work together with users to provide the best experience possible.”

Press release follows:

MOUNTAIN VIEW, Calif., Nov 02, 2010 (BUSINESS WIRE) — On October 7, 2010, federal district court Judge James Ware preliminarily approved a class action settlement related to the launch of Google Buzz last February. The settlement resolves a lawsuit filed by Gmail users who alleged that Buzz’s launch violated their privacy.

“We are satisfied with the agreement and are glad to move forward,” said a Google spokesperson. “We have always been committed to offering users transparency and choice in Buzz and all our products, and will continue to work together with users to provide the best experience possible.”

Immediately following the Buzz launch in February of this year, Google moved quickly to make significant product improvements including increased visibility, an updated start up process featuring auto-suggestions, and adding Buzz to the Google Dashboard. In April, Google rolled out a “second chance” encouraging Buzz users to check and verify their privacy settings.

The settlement agreement acknowledges the important changes Google has made to Buzz. As part of the settlement agreement, Google will create an $8.5 million fund, the majority of which will go to organizations focused on Internet privacy education and policy, and will make additional efforts to educate users about the privacy aspects of Buzz.

Gary E. Mason, counsel for the plaintiffs in the litigation, said, “We feel this settlement has many benefits to class members, including providing a significant amount of money to non-profit groups committed to educating users about Internet privacy and ensuring that Buzz users can join this on-line community without compromising their privacy.”

The Court will consider final approval of the proposed settlement on January 31, 2011. Full details on the settlement are available at www.BuzzClassAction.com.