Google's agreement to buy Nest Labs has been cleared by U.S. antitrust regulators, possibly paving the way for an early closure of the transaction.

The review into the transaction was granted "early termination," according to an update from the U.S. Federal Trade Commission.

Google said last month it was paying $3.2 billion in cash to acquire Nest, a maker of smart smoke alarms and thermostats, in what is seen as a bid by the Internet giant to expand into the connected home market.

The company said the transaction was expected to close in the next few months and was subject to customary closing conditions, including the receipt of regulatory approvals in the U.S.

Under the Hart-Scott-Rodino (HSR) Act, parties to certain large mergers and acquisitions must file a pre-merger notification and wait for government review. The FTC has the option to terminate the review before the end of the waiting period and grant early termination, after which the parties are free to close the deal.

A request for early termination is granted only after the FTC and the Antitrust Division of the Department of Justice have completed their review and determined not to take any enforcement action during the waiting period, FTC said on its website.

Google could not be immediately reached for comment.

The proposed acquisition is being closely watched because of potential privacy implications, as there are concerns that Google could use data collected from people's homes to better target its advertising. Shortly after the announcement of the planned acquisition, Nest's co-founder Matt Rogers wrote on the company's blog: "Our privacy policy clearly limits the use of customer information to providing and improving Nest's products and services. We've always taken privacy seriously and this will not change."

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com