Reading List: Facebook Faces the FTC

Each day we provide a roundup of five stories from around the Web that our editors read and found noteworthy. Follow us on Twitter for updates throughout the day @digiday.

Facebook’s Privacy Woes: As Facebook sucks up more and more data about its users, it’s reportedly on the verge of agreeing to 20 years of privacy audits from the FTC as part of a settlement regarding “deceptive practices.” The firm continues to experiment with new data-driven ad products, and the concept of a Facebook ad network has been bandied about for years, but as scrutiny of its practices escalates and an inevitable IPO nears, the social network may find it’s becoming increasingly difficult to innovate around its user data as quickly as it might wish. NYT– Jack Marshall @JackMarshall

CheapVille: Zynga’s glorious run of luminous press coverage is officially over, and like many one-time Valley darlings, it’s not happy about that. Earlier this year, there was a slew of reports critical of the company’s accounting reports issued as part of Zynga’s build-up to its IPO. Then came Thursday’s scathing piece in the Wall Street Journal, where Zynga was shown to have demanded back stock options from early employees — which didn’t exactly paint a flattering picture of CEO Mark Pincus. Late Thursday, Pincus responded with a company-wide memo (which Fortune published), disputing the tone of the piece, which he called “disappointing but is to be expected.” Pincus is probably right. The digital media world is famous for hyping up tech companies and tearing them down. But Pincus also needs to get out and explain himself more on this stock option issue. It seems like with a $20 billion IPO coming up, everyone was going to end up doing pretty well. Valley startups shouldn’t offer options if they don’t intend to honor them. Otherwise, there are other places to work with the promise of getting rich quick. Like banks! Fortune — Mike Shields @digitalshields

Google Keeps Shopping: Google is snapping up startups that help add new layers to search. The company is now acquiring Katango, a platform that sorts through a consumer’s social networks and tags contacts according to relationships, and Apture, a plug-in that delivers a pop-up with info, links and images when a word or phrase is clicked. Apture will fit into Chrome, and Katango might end up in Google Plus, although the company isn’t confirming the latter. The shopping tally so far? Google has bought 57 companies in the first nine months of 2011. WSJ –Carla Rover @carlarover

Kill The iAd?: Apple is faced with a choice regrading its less than transformative iAd: kill the underwhelming business, keep it the way it is, or maybe double down and try and compete with the biggest players in online advertising. Forbes argues that ads have never been part of Apple’s DNA. And it was in deceased founder Steve Jobs cutthroat character to kill underperforming businesses. You might argue that Apple should stick with iAds, considering the tipping point we see mobile media and advertising about to engage upon. Some serious money is about to pour into this world. But our guess is that iAds should go. Even if mobile ads grow 100 percent next year, that’s not the kind of money that will excite Apple, which is looking to sell 100 million iPads in the near future. And mobile ads are just not revolutionary enough for a company like Apple, which could better focus its efforts elsewhere, like reinventing TV. Forbes — Mike Shields @digitalshields