Today: Facebook announces that it is rewriting its privacy policies in wake of "Sponsored Stories" settlement, seeks to begin using profile photos for facial recognition. Also: PC stocks take a hit from new report, but Silicon Valley has a strong day on Wall Street.

The Lead: Facebook looks to rewrite privacy policy, use profile pics for tagging

Facebook announced Thursday that it is planning to update its primary policies regarding use of users' data, seeking to clarify its intense usage of information collected from more than 1 billion global members while also extending its controversial photo-identification system.

The main thrust of the proposed update to the social network's data-use policy is to be much clearer about how Facebook uses user data, which can be summed up as "in every way possible."

"We want to be really, really clear that whenever you give us information, we're going to take it," Chief Privacy Officer Erin Egan told AllThingsD writer Mike Isaac.

Much of the blog post detailing the update focuses on the combination of advertising and Facebook members' social-media usage, a sticking point since the company faced a class-action suit from users whose names and photos were used in so-called Sponsored Stories. Menlo Park-based Facebook agreed to pay out $20 million in a settlement of that case, which was wrapped up this week when a judge gave his final OK to the agreement, which could pay as little as 2 cents to affected members.

"We revised our explanation of how things like your name, profile picture and content may be used in connection with ads or commercial content to make it clear that you are granting Facebook permission for this use when you use our services," Egan wrote in Thursday's blog post.

Facebook requests feedback about the changes, but no longer is bound to abiding by it, after changing its rules last year among a host of privacy changes. Previously, Facebook had to put privacy changes up to a vote of its members if more than 7,000 people commented on a proposed change, but the subsequent vote needed to attract 30 percent of Facebook users' input to be considered binding, nearly impossible to attain as the Menlo Park company's offering has exploded globally.

As journalists and privacy advocates begin to tear through the massive changes, the first change to draw attention regards Facebook's already-controversial facial-recognition technology. The offering, which seeks to identify users in photos that are uploaded to the service, created an uproar in Europe, where Facebook eventually shut off the service and deleted its trove of information.

In areas where the technology is still used, Facebook is seeking to allow users' profile pictures to be used as part of the facial-recogntion system, instead of relying solely on previously tagged photographs. Facebook's goal with the change is to make sure that photos are tagged so users are sure to find out when other users are uploading pictures of them to the social network.

"Our goal is to facilitate tagging so that people know when there are photos of them on our service," Egan told Reuters.

While Facebook no longer is mandated to following users' demands in its privacy policies, it is still under close scrutiny from the federal government, after a 2011 deal with the Federal Trade Commission sparked by allegations of deception and sharing users' personal information without consent. As a result of that agreement, Facebook is subject to independent audits of its privacy practices for two decades; Egan reported recently that its first audit confirmed "that the controls set out in our privacy program are working as intended," but "also helped us identify areas to work on as Facebook continues to evolve as a company."

Facebook's attempt to open all possible avenues for advertising is part of a push to monetize its popularity after a record-breaking initial public offering valued the company at more than $100 billion. More than a year after its IPO, Facebook recently passed the $100 billion level in market capitalization, after its quarterly earnings report showed strong gains in mobile advertising revenue and investors pushed the stock higher.

Facebook shares gained 1.8 percent to $41.28 Thursday, a record closing high that again pushed the company's market cap north of $100 billion.

SV150 market report: Silicon Valley stocks gain, but PC industry under more pressure

Wall Street continued to claw back from Tuesday's big losses on Thursday, as the federal government greatly raised its calculation of economic growth in the spring quarter, from 1.7 percent to 2.5 percent. Tech stocks took center stage: While the Dow Jones and Standard & Poor's 500 clocked in with slight gains, the tech-heavy Nasdaq easily outpaced them with a 0.8 percent gain, and the SV150 wasn't far behind with a 0.5 percent increase.

One sector that held back gains was personal computers, as an already dim view of the market for PCs grew even darker. After earlier projecting that PC shipments would fall 7.8 percent in 2013, analysis firm IDC said Thursday that the industry will contract by 9.7 percent this year as even emerging economies -- especially China -- move more to mobile devices such as smartphones and tablets. The report continues a depressing trend for the PC industry, which declined 11 percent year-over-year last quarter as Hewlett-Packard (HPQ) lost its title as world's largest PC manufacturer to China's Lenovo. HP suffered at the hands of investors Thursday, dropping 0.4 percent to $22.52, but semiconductor companies firmly planted in the PC industry had a worse day: Intel (INTC) declined 1 percent to $22.06 and Advanced Micro Devices fell 1.2 percent to $3.38.

Elsewhere, gains were common. Mountain View search giant Google (GOOG) gained 0.8 percent to $855.43 despite losing an important Android executive, reportedly after Google cofounder Sergey Brin began dating a Google worker with whom Hugo Barra had been involved. Yelp gained 4.1 percent to $53.80, Apple (AAPL) experienced a slight gain of 0.2 percent to $491.70, and Netflix (NFLX) increased 1.6 percent to $287.85 after signing a new lease for space in Los Gatos after a confrontational process to build the complex.

After the bell, San Francisco cloud software company Salesforce announced that it earned 12 cents a share on revenues of $957.1 million in its most recent quarter, both representing large year-over-year gains and beating analysts' forecasts. After gaining 2 percent to $43.65 in regular trading, shares shot up to more than $47 in late trading, challenging the company's 52-week high of $47.58.

Up: Yelp, SolarCity, Salesforce, Facebook, Electronic Arts (ERTS), Netflix, Symantec, Pandora, VMware, Applied Materials, eBay (EBAY), Zynga, LinkedIn, Adobe (ADBE), Google, Gilead, SunPower (SPWRA), Yahoo

Down: AMD, Intel, Juniper, HP, Tesla, Nvidia

The SV150 index of Silicon Valley's largest tech companies: up 6.49, or 0.51 percent, to 1,290

The tech-heavy Nasdaq composite index: Up 26.95, or 0.75 percent, to 3,620.3

The blue chip Dow Jones industrial average: Up 16.44, or 0.11 percent, to 14,840.95

And the widely-watched Standard & Poor's 500 index: Up 3.21, or 0.2 percent, to 1,638.17

Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.