The penalty would be the largest ever against a technology company. Last year, Facebook (Nasdaq: FB), the No. 1 social networking site, agreed to be monitored for 20 years by the FTC but didn't have to pay a penalty.
The FTC alleged that Google, of Mountain View, Calif., bypassed privacy settings in Apple's Safari browser. Last year, Google also signed a 20-year privacy agreement with the FTC.
The FTC previously brought similar actions against Twitter and MySpace, which both agreed to be monitored for 20 years.
Google shares rose $1.38 to $587.39 in Tuesday trading.