Oct. 16 (Bloomberg) -- Facebook Inc., the second biggest social-networking Web site, settled a New York probe of how it protects minors from sexual content while other states said the accord was insufficient and subpoenaed competitor MySpace Inc. for data on users who are sex offenders.

New York Attorney General Andrew Cuomo, who subpoenaed Facebook after investigators posing as underage users were solicited for sex, said the settlement requires a third-party monitor for Facebook and 24-hour response-time to user complaints about nudity, pornography or harassment. Connecticut Attorney General Richard Blumenthal, who leads a 50-state group probing networking sites, said the accord was a ``step forward.''

``Much more must be done to protect children on Facebook,'' Blumenthal said in a statement, adding that the group hasn't settled. ``Drastic changes must better shield children from sexual predators, unsuitable content and unsafe adults.''

The coalition wants Facebook to verify user-age and identity, filter sexually explicit, racist or violent content and hide minors' profiles from adults, he said. The group will explore options against such networking sites including ``possible legal action,'' Blumenthal said.

State's Settlement

Cuomo said his state's settlement was a model for compliance by networking sites and balanced Internet freedom-of-use with the need to protect minors. Facebook, which said it has 47 million active users, first included only university students, later expanding to high school students and then the general public.

``This is going to remedy the situation,'' Cuomo said at a news conference today in New York. Last month, he said Facebook didn't live up to its claims of safety. Today, he noted that he had warned the company in a letter accompanying his subpoena that it faced possible consumer fraud charges if it failed to live up to its safety claims. His office is still investigating other Web sites, Cuomo said.

Mark Zuckerberg, founder and chief executive officer of Facebook, said today in a statement that the agreement ``will set new industry standards to stop abuse online.''

Cuomo said the focus of his investigation was disclosure, complaints and the independent monitor, who will serve for two years. By comparison, the broader 50-state investigation is focused on age-verification, he added.

Facebook and News Corp.-owned MySpace have come under attack by regulators for not doing enough to police their sites. The states' investigation began a year ago, and several subpoenas have already been sent to Santa Monica, California-based MySpace.

State Coalition

Connecticut's Blumenthal said the state coalition would issue a letter to Palo Alto, California-based Facebook with its specific demands in the next few days. He said the coalition was in continuing discussions with MySpace.

Tracy Akselrud, who returned a call to MySpace, the largest U.S. social-networking Web site, declined to comment. In May, MySpace agreed to provide state attorneys general with information on registered sex offenders who created pages on the site before they were identified and removed.

North Carolina Attorney General Roy Cooper, co-leader of the state coalition with Blumenthal, said in a July report that MySpace had 29,000 registered sex offenders as users. Blumenthal said that number is now 32,000.

The company is providing lists of sex offenders whose memberships in the site are supposedly being purged, Blumenthal said. The attorneys general had issued ``a number of subpoenas for names of convicted sex offenders who have profiles'' on MySpace, he said today in an interview. The coalition hasn't issued subpoenas to Facebook, he said.

Buy a Stake

Microsoft Corp. is in talks to buy a stake of Facebook which would value the company at $10 billion, the Wall Street Journal reported last month. Microsoft Chief Executive Officer Steve Ballmer this month called the idea ``idle speculation.''

Microsoft already has an advertising agreement with Facebook in the U.S. Ad spending on social-networking Web sites in the states will double to $900 million this year, with Facebook and MySpace getting three quarters of the revenue, according to Emarketer Inc.

New York-based News Corp.'s shares fell 48 cents to $23.54 at 4 p.m. in New York Stock Exchange composite trading.

To contact the reporter on this story: Karen Freifeld in New York at kfreifeld@bloomberg.net.

Last Updated: October 16, 2007 16:25 EDT