Many users resented Facebook grabbing and sharing data
Facebook members have forced the social networking site to change the way a controversial ad system worked.
More than 50,000 Facebook users signed a petition calling on the company to alter or abandon its Beacon advertising technology.
When Facebook users shopped online, Beacon told friends and businesses what they looked at or bought.
Many considered the data sharing to be an intrusion that exposed them to more scrutiny than was comfortable.
In response to the demands, Facebook's 55 million members will have more control over whether data about what they do online is used for Beacon.
Before the changes, Beacon was an "opt out" system and many complained that they missed the chance to avoid using it when it was introduced in early November.
Now Beacon will be an "opt in" system that only tracks data if explicit permission is granted to Facebook to do so.
More than 40 websites, including Fandango.com, Overstock.com and Blockbuster, signed up to use Beacon software on their webpages and report what Facebook users did when they visited.
Activist site MoveOn was at the forefront of protests against Beacon and set up the petition to gather signatures on 20 November.
Beacon embarrassed many doing Christmas shopping online
"It also says a lot about the ability of internet users to band together to make a difference," said Adam Green, a spokesman for MoveOn.
Facebook apologised for its actions via a letter on its website.
"We're sorry if we spoiled some of your holiday gift-giving plans," read the letter. "We are really trying to provide you with new meaningful ways, like Beacon, to help you connect and share information with your friends."
Industry commentator Om Malik said Facebook users had to be certain to opt out completely from Beacon otherwise Facebook would still collect data from partner sites - even if that data was not shared more widely.
The changes to Beacon may not be the last that Facebook has to make to the technology.
Two rights groups, the Electronic Privacy Information Center and the Center for Digital Democracy, are believed to be compiling a complaint to the US Federal Trade Commission about it.