Facebook is beefing up privacy protections on the world's most popular online social network, addressing mounting pressure to better secure personal data exchanged among its nearly 500 million members.

The issue has come to a head in recent months amid concern that Facebook makes it possible for Internet stalkers, cyber criminals and even nosy neighbors to gain a wealth of information about its users without their knowledge thanks to a confusing system for setting privacy safeguards.

Facebook Chief Executive Mark Zuckerberg said on Wednesday his company would roll out changes over the coming weeks that would give users more powerful tools to prevent personal information from being accessed by others.

For instance, Facebook will allow users to block all third parties from accessing their information without their explicit permission. It will also make less information available in its user directory and reduce the number of settings required to make all information private from nearly 50 to less than 15.

Still, Zuckerberg said Facebook's default settings will continue to make it relatively easy for users to obtain information about each other as the company walks a delicate line between protecting privacy rights and promoting social networking.

Users use the service because they love sharing information, Zuckerberg said on a webcast presentation.

Facebook is increasingly challenging more established Internet players like Yahoo Inc and Google Inc for consumers' online time and for ad dollars.

While Facebook will make it simpler for users to boost their privacy safeguards, they will have to opt out of default policies by which much of their data is publicly available.

Gartner analyst Ray Valdes said he believed these steps should allay the concerns of Facebook users who were protesting its current privacy policies. He estimated they accounted for less than 1 percent of the site's user base.

But there are other voices that will continue -- governments, public sector and privacy advocates, Valdes said. The fundamental issues won't go away. They will reappear over time. Again and again.

Valdes said that privacy concerns will continue to crop up with Facebook and other social networks because such sites need to balance the right of users to interact safely over the Internet with the need to generate profits by sharing information with advertisers and other business partners.

Facebook investors include Digital Sky Technologies, Microsoft Corp, Hong Kong tycoon Li Ka Shing and venture capital firms Accel Partners, Greylock Partners and Meritech Capital Partners.

Controversy about Facebook's privacy policies has mounted over the past year as its membership has grown and criminals have increasingly used its vast data banks to access information to help them swindle its users.

A month ago, four U.S. senators told the company they objected to a recent change that made a user's current city, hometown, likes, interests and friends publicly available. That information had previously been seen only by friends.

One of those lawmakers, Sen. Charles Schumer of New York, said on Wednesday that Facebook's new privacy controls represented a significant first step in addressing his concerns.

Facebook has heard the call of its users and realizes that much greater privacy protections are needed, Schumer said in a statement.

But he added that he would prefer that Facebook share its users' information only if they opt in to doing so.

One cannot know how successful any opt-out system is until users actually experience it, Schumer said. We will be monitoring this carefully.

The nonprofit Electronic Privacy Information Center, which has asked the U.S. government to investigate Facebook's privacy policies, said that the new efforts do not go far enough.

We think it's time for Congress to update the privacy laws. We can't be dependent on Facebook to decide on how much privacy people on the Internet will have. That's something that has to be established in law, said EPIC Executive Director Marc Rotenberg,

Palo Alto, California-based Facebook is a private company and does not disclose financial data, though analyst estimates for its 2009 revenue range from $500 million to $650 million, primarily from selling online ads targeted at users based on their activity and profile information on Facebook.

(Reporting by Jim Finkle; Editing by John Wallace, Richard Chang and Matthew Lewis)

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