YouTube will be allowed to mask important user information from records it must turn over to Viacom, Google said in a blog post on Monday.
"Viacom and the other litigants have backed off their demand for YouTube user viewing histories," Google said in a statement. "We have reached agreement to anonymise the data."
A Viacom spokesman declined to comment.
The move comes after a federal court earlier this month ordered Google's YouTube to hand over usernames, IP addresses and viewing histories to Viacom, parent company of Comedy Central and MTV. This ignited a controversy over internet privacy and put Viacom on the defensive.
Last year, Viacom accused Google's YouTube of violating its copyright in a $1bn lawsuit. Following the court's order, Viacom was widely criticised for intruding on people's online privacy even though the company had said it never asked to receive personally identifying information.
However, this does not mean the case is at an end. Last weekend, two sources with knowledge of the negotiations between the companies told ZDNet.co.uk's sister site, CNET News that Google was refusing to hand over to Viacom information about what videos YouTube employees have watched or uploaded to the site.
The sources said the information could help Viacom prove that YouTube has turned a blind eye to copyright infringement on its site. Google is also likely to ask to see similar records about Viacom's employees. That might show that while Viacom's lawyers were demanding that YouTube remove its videos, Viacom's marketing managers may have been among those that posted them.
The case is not scheduled to go to court until next year at the earliest.
