YouTube to pay $170 million fine after violating kids' privacy law

Henrietta Brewer
September 4, 2019

YouTube owner Google will pay the Federal Trade Commission $136 million and NY state $34 million to settle charges of violating children's online privacy.

The FTC and the NY attorney general alleged in a complaint that Youtube gathered children's personal information by using "cookies", or personal identifiers, that track users online. Numerous huge Silicon Valley companies are also under antitrust investigations aimed at determining whether the companies have unlawfully stifled competition.

In a blog, YouTube's chief executive Susan Wojcicki said the video-streaming site would use artificial intelligence to automatically identify and label other videos that "clearly target young audiences" - such as those with an emphasis on kids' characters, toys and games. Slaughter, who called the violations "widespread and brazen", said the settlement fails to require YouTube to police channels that provide children's content but do not designate it as such, thus allowing more lucrative behavioral advertising, which relies on tracking viewers through cookies.

YouTube will treat data from anyone watching children's content as coming from a child, regardless of the actual age of the user. "The FTC let Google off the hook with a drop-in-the-bucket fine and a set of new requirements that fall well short of what is needed to turn YouTube into a safe and healthy place for kids".

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"YouTube touted its popularity with children to prospective corporate clients", said FTC Chairman Joe Simons in a statement.

The settlement also calls for YouTube to change the way it handles children's content.

COPPA requires online websites to obtain parental consent prior to collecting kids' information.

Investigators at the FTC and in NY agreed, finding that Google's own content rating systems had identified certain YouTube channels as directed toward children.

She also said the firm would stop targeting ads based on data gathered about users who had watched children's videos.

As with the Facebook settlement, the FTC vote was 3-2, along party lines.

YouTube "baited kids with nursery rhymes, cartoons, and more to feed its massively profitable behavioural advertising business", Chopra said in a tweet.

In his dissent, FTC Commissioner Rohit Chopra noted that the "terms of the settlement were not even significant enough to make Google issue a warning to its investors". Google's $170 million payment reflects less than 1 percent of the company's quarterly advertising revenue.

The announcement marks the second time in two months that the FTC has slapped a big tech company with a major fine, after the commission announced a $5 billion settlement with Facebook (FB) and its privacy lapses in July. His dissent includes redacted data suggesting that behavioral ads improperly displayed on videos viewed by kids should have resulted in a fine into the billions for Google, a company that registered nearly $39 billion in earnings it reported in July.

Google is already under a 2011 agreement with the FTC that barred it from mispresenting its privacy policy and subjected the company to 20 years of regular, independent privacy audits. "When Google pays a fine and still profits from misconduct, this is not a penalty".

Features like comments and notifications will no longer be available on videos made for kids.

The $136m fine is the largest penalty collected under COPPA since the law was enacted in 1998, and is considerably larger than the previous record fine of $5.7m, given to video site TikTok in February.

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