IDG News Service — Google (GOOG) is spending US$8.5 million to settle a class-action lawsuit filed over the rollout of its Google Buzz social-networking service.

The proposed settlement was filed Friday in federal court in San Jose, California. The money will cover attorney fees and also be used to fund groups focused on Internet privacy, according to court filings.

If approved by a judge, the settlement will close a chapter on the ill-fated February launch of Google's alternative to Facebook. Buzz worried users because it made the names of users' Gmail contacts public, often without their knowledge. Google quickly addressed the issue but was soon hit with class-action lawsuits, which were eventually consolidated into this case.

In a statement Friday, Google said it was "satisfied with the agreement" and "glad to move forward."

"We have always been committed to offering users transparency and choice in Buzz and all our products, and will continue to work together with users to provide the best user experience possible," Google said.

Coincidentally, news of the settlement broke as Google said it was going to simplify its privacy policies to make them easier to understand.

The Internet company has come under fire for the way it handles the growing amount of sensitive information that its users hand over. This week, Consumer Watchdog -- a longtime Google critic -- released a creepy video criticizing Google CEO Eric Schmidt and calling for a national Do Not Track Me list, similar to the national Do Not Call list.

Gary Mason, the lead lawyer representing plaintiffs in the class-action lawsuit, could not immediately be reached for comment.

Robert McMillan covers computer security and general technology breaking news for The IDG News Service. Follow Robert on Twitter at @bobmcmillan. Robert's e-mail address is robert_mcmillan@idg.com