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The investigation report raised concerns over the sharing of users' personal information with third-party developers creating Facebook applications such as games and quizzes. There are more than 950,000 developers in some 180 countries.
The report said Facebook lacks adequate safeguards to restrict these outside developers from accessing profile information.
It said Facebook's policy of indefinitely keeping the personal information even after deactivation of an account violated the Personal Information Protection and Electronic Documents Act of Canada.
'We urge Facebook to implement all of our recommendations to further enhance their site, ensure they are in compliance with privacy law, and ultimately show themselves as models of privacy,'' said Assistant Commissioner Elizabeth Denham, who led the investigation.
She said the Privacy Commission will review after 30 days how Facebook has complied with its mandatory recommendations.
In response, Facebook said it 'will soon be introducing a number of new additional privacy features to its service that we believe will keep the site at the forefront of user privacy and address any remaining concerns the (Privacy) Commission may have.''
More than one third of Canadians use Facebook, making it the website's third biggest base after the US and the UK.
Facebook has 250 million active users worldwide as of today.