The U.S. Federal Trade Commission said Sony BMG agreed to settle charges from the commission that it secretly installed software on users' computers that would monitor listening habits for marketing purposes, while also limiting the ability to play the music on certain devices and make copies.

As a copy protection measure, Sony BMG embedded stealth software into some if its music CD's sold in 2005 that would automatically install itself into a users computer. The software, called the Extended Copy Protection and MediaMax CD-3, was intended to limit the number of copies that could be made of the music.

Consumers' computers belong to them, and companies must adequately disclose unexpected limitations on the customary use of their products so consumers can make informed decisions regarding whether to purchase and install that content, FTC Chairman Deborah Majoras said in a statement.

The settlement requires Sony BMG, a joint venture of Sony Corp. and Germany's Bertelsman AG, to clearly and prominently disclose any software restrictions and specifically obtain consumers' authorization to install such software.

The software was unreasonably difficult to uninstall and was also poorly designed. It also created security vulnerabilities that allowed hackers to gain access to the computer, the FTC said.

Sony BMG will also be required to give consumers up to $150 to repair any damage to their systems as a result of trying to uninstall the software. The agency said it was deceptive because Sony BMG failed to disclose that it would be installed.

The agreement only settles the charges and does not mean Sony BMG admitted that it violated any laws.

The software - which is widely considered as spyware - was included on millions of Sony BMG CDs sold, the FTC said.

We are pleased to have reached this agreement with the Federal Trade Commission, said Sony BMG in a statement, according to Reuters.

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