Google’s YouTube agreed on Wednesday to pay a $170 million fine and limit ads on kids’ videos to settle claims that the company violated children’s privacy laws.
The world’s largest video-sharing site agreed to pay the fine, which is a record for a children’s privacy case, to the U.S. Federal Trade Commission and New York State for failing to obtain parental consent in collecting data on kids under the age of 13, the FTC said. Starting in four months, Google also will limit data collection and turn off commenting on videos aimed at kids, YouTube announced at the same time, moves that will hamstring its ability to sell advertisement against a massive portion of its media library.
The settlement under the 1998 Children’s Online Privacy Protection Act, or COPPA, represents the most significant U.S. enforcement action against a big technology company in at least five years over its practices involving minors. Washington is stepping up privacy and antitrust scrutiny of the big internet platforms that have largely operated with few regulatory constraints.
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From the Official FTC Announcement:
In a complaint filed against the companies, the FTC and New York Attorney General allege that YouTube violated the COPPA Rule by collecting personal information—in the form of persistent identifiers that are used to track users across the Internet—from viewers of child-directed channels, without first notifying parents and getting their consent. YouTube earned millions of dollars by using the identifiers, commonly known as cookies, to deliver targeted ads to viewers of these channels, according to the complaint.
The COPPA Rule requires that child-directed websites and online services provide notice of their information practices and obtain parental consent prior to collecting personal information from children under 13, including the use of persistent identifiers to track a user’s Internet browsing habits for targeted advertising. In addition, third parties, such as advertising networks, are also subject to COPPA where they have actual knowledge they are collecting personal information directly from users of child-directed websites and online services.
“YouTube touted its popularity with children to prospective corporate clients,” said FTC Chairman Joe Simons. “Yet when it came to complying with COPPA, the company refused to acknowledge that portions of its platform were clearly directed to kids. There’s no excuse for YouTube’s violations of the law.”
The YouTube platform allows Google account holders, including large commercial entities, to create “channels” to display their content. According to the complaint, eligible channel owners can choose to monetize their channel by allowing YouTube to serve behaviorally targeted advertisements, which generates revenue for both the channel owners and YouTube.
In the complaint, the FTC and New York Attorney General allege that while YouTube claimed to be a general-audience site, some of YouTube’s individual channels—such as those operated by toy companies—are child-directed and therefore must comply with COPPA.
The complaint notes that the defendants knew that the YouTube platform had numerous child-directed channels. YouTube marketed itself as a top destination for kids in presentations to the makers of popular children’s products and brands. For example, Google and YouTube told Mattel, maker of Barbie and Monster High toys, that “YouTube is today’s leader in reaching children age 6-11 against top TV channels” and told Hasbro, which makes My Little Pony and Play-Doh, that YouTube is the “#1 website regularly visited by kids.”
Several channel owners told YouTube and Google that their channels’ content was directed to children, and in other instances YouTube’s own content rating system identified content as directed to children. In addition, according to the complaint, YouTube manually reviewed children’s content from its YouTube platform to feature in its YouTube Kids app. Despite this knowledge of channels directed to children on the YouTube platform, YouTube served targeted advertisements on these channels. According to the complaint, it even told one advertising company that it did not have users younger than 13 on its platform and therefore channels on its platform did not need to comply with COPPA.
Settlement with the FTC
In addition to the monetary penalty, the proposed settlement requires Google and YouTube to develop, implement, and maintain a system that permits channel owners to identify their child-directed content on the YouTube platform so that YouTube can ensure it is complying with COPPA. In addition, the companies must notify channel owners that their child-directed content may be subject to the COPPA Rule’s obligations and provide annual training about complying with COPPA for employees who deal with YouTube channel owners.
The settlement also prohibits Google and YouTube from violating the COPPA Rule, and requires them to provide notice about their data collection practices and obtain verifiable parental consent before collecting personal information from children.
Statements From FTC Commissioners
The Commission voted 3-2 to authorize the complaint and stipulated final order to be filed. Chairman Simons and Commissioner Christine S. Wilson issued a statement on this matter, while Commissioners Noah Joshua Phillips, Rohit Chopra, and Rebecca Kelly Slaughter issued separate statements.
Championing the protections we have in place for children is a shared responsibility across the company. To that end, we are introducing new, mandatory annual training for our teams about our requirements in this area.
Today’s changes will allow us to better protect kids and families on YouTube, and this is just the beginning. We’ll continue working with lawmakers around the world in this area, including as the FTC seeks comments on COPPA. And in the coming months, we’ll share details on how we’re rethinking our overall approach to kids and families, including a dedicated kids experience on YouTube. I have the privilege of working alongside parents who deeply care about protecting kids. We know how important it is to provide children, families and family creators the best experience possible on YouTube and we are committed to getting it right.
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Proposed Settlement Order
34 pages; PDF.
Complaint: FTC v. Google, YouTube
19 pages; PDF.
We Plan to Update this Post with Reactions, Media Reports, and Other Material
UPDATE 1 From Politico
Some privacy activists, though, said the FTC should have been much tougher on YouTube. Jeff Chester, executive director of the Center for Digital Democracy, praised the agency for taking action but said it failed to sufficiently penalize Google, calling the $170 million fine “paltry.”
“Google made billions off the backs of children, developing a host of intrusive and manipulative marketing practices that take advantage of their developmental vulnerabilities,” Chester said. “More fundamental changes will be required to ensure that YouTube is a safe and fair platform for young people.”
“[I]t’s extremely disappointing that the FTC isn’t requiring more substantive changes or doing more to hold Google accountable for harming children through years of illegal data collection,” said Josh Golin, head of the Campaign for a Commercial-Free Childhood.
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